Balancing Environmental Sustainability and Economic Development: Perspectives from New Structural Economics

This paper investigates the critical factors for balancing environmental sustainability and economic development through the lens of New Structural Economics. Specifically, we utilize the congruence index to access the alignment between local factor endowment structure and firm production input structure. Using a comprehensive manufacturing firm-level pollutant emissions dataset from the Yangtze River Economic Belt (YEB) region in China, we find that firms demonstrating higher congruence exhibit improved economic performance and alignment with comparative advantages. This not only contributes to increased economic efficiency for these firms but also leads to a reduction in pollutant emissions, including wastewater discharge and Chemical Oxygen Demand (COD) emissions. Our study provides valuable insights into achieving mutually beneficial environmental and economic outcomes.