Empirical Analysis on the Relationship Between Industrial Economy Growth and Environmental Pollution of Sichuan Province

This paper investigates the cointegration relationship between industrial economic growth and environmental pollution of Sichuan province and further tests its Granger causality by using time series data of three typical pollution indicators. The co-integration analysis shows the above relationship may not be EKC, but linear and positive. Hence, it is hardly possible to turn the relationship negatively correlative by market adjustment itself. The result of Granger causality shows industrial economic growth is the Granger cause for the changes of environment quality but not vice versa. The reasons may include the failure of recent technology advances being reflected on lower pollution emission intensity, the absence of resource trading market and emission trading market and the lack of incentives of firms to manufacture environment-friendly.