An Empirical Study of Relations between Environmental Protection Investment and Economic Growth

At first we study the causality between environment protection investment and economic growth in our country by Granger Causality Test. The result is that environment protection investment growth is the Granger cause of GDP growth. It indicates that environment protection investment drives the development of GDP. Although GDP is not the Granger cause of environment protection investment, economic growth has certain effect for environment protection investment. At the same time, this article investigates the co-integration relationship between environment protection investment and economic growth by co-integration test and Error Correction Model. From long term, there is a long-term equilibrium relationship between environment protection investment and economic growth. With the rapid and persistent development of economy in our country, it is important to keep the balance between environment protection investment and economic growth. At last some conclusions and correlative policy suggestions are given.