Ecology versus economic development: Effects of China's Yangtze River Economic Belt strategy

Abstract This study employs China's Yangtze River Economic Belt strategy as a quasi‐natural experiment to investigate the impact of prioritizing green development on economic growth. Our empirical findings show that the strategy significantly reduces urban industrial wastewater discharge. It helps transition the region's industries towards technology‐driven service sectors while maintaining a steady economic growth rate. On average, cities in the Yangtze River Economic Belt see a 21.9% decrease in annual industrial wastewater discharge, a 1.9% increase in economic growth rate, a 4.9% rise in the proportion of service industries' contribution to GDP, and a 2.4% increase in the number of employees in productive service industries. Moreover, our empirical results highlight the heterogeneity in the effects of the strategy across different regions, which can be attributed to factors such as population density, infrastructure, levels of human capital, and government governance. The implementation of the Yangtze River Economic Belt strategy offers valuable insights for developing countries on how to balance between economic development and environmental protection.