Developing while polluting? Evidence from the Yangtze River Delta in China

This study explores the dynamic relationship between industrial pollution and urban economic development in the Yangtze River Delta urban agglomeration based on the EKC hypothesis. In this paper, we use a panel dataset covering 27 cities in the Yangtze River Delta from 2006 to 2019 for the analysis, group the samples by a panel threshold model, and use a fixed-effects model for EKC estimation. The result shows that the EKC forms in different regions of the Yangtze River Delta are all N-shaped, and most cities are between two inflection points. The relationship is developing for the better in the short term, but the situation is not optimistic in the long term. The current industrial transformation has not been fully effective, and the development of industries still increases environmental pollution. The level of foreign investment will reduce pollution emissions. The effectiveness of environmental regulation is related to the city's development stage and has not been fully highlighted in the Yangtze River Delta. Based on the findings, this study concludes that environmental improvement should be used as an essential channel for sustainable urban development to enhance economic innovation and competitiveness. Meanwhile, it is necessary to promote industrial structure upgrading further, actively introduce foreign investment, strengthen regulation, and establish a two-way interaction mechanism between cities to increase R&D expenditures for eco-friendly industrial operations. The Environmental Kuznets Curve (EKC) hypothesis is valid in the Yangtze River Delta, with heterogeneity.The pollution halo hypothesis is supported in the Yangtze River Delta.The effectiveness of environmental regulation in the Yangtze River Delta is not fully highlighted.