Does neighboring green development benefit or suffer from local economic growth targets? Evidence from China

This study explores whether green development benefits or suffers from economic growth targets. Although prior research has highlighted various aspects of green development, the impact of performance targets, which are set by authorities as a baton of macroeconomic policy, remains largely unexplored. Using data from 285 cities in China over the period 2005-2018, we employ a spatial Durbin model to examine the role of economic growth targets in green development. Results show that green total factor productivity is improved while pollution emission intensity is increased, suggesting that economic growth targets are a double-edged sword that promotes green development modes yet inhibits green development effects. Mixed results are also observed in surrounding areas; however, their magnitudes are spatially attenuated. Furthermore, a channel analysis reveals that the outcome is influenced by green innovation and resource misallocation in the region as well as by strategic interaction and transboundary pollution in neighboring regions.