Economic Growth and Industrial Pollution: A Business Research Report

This report investigates the intricate relationship between economic growth and industrial pollution, examining how industrial activities affect environmental quality. It begins with an introduction to the topic, highlighting the increasing pressure on natural resources due to industrialization and globalization. The report's objectives are to analyze the impact of industrial pollution on various countries and provide recommendations for achieving economic growth while minimizing pollution. The scope includes case studies of the United States, China, India, and Mediterranean countries. The literature review covers the causes of industrial pollution, including the lack of strict policies, outdated technology, small-scale industries, waste disposal systems, and the use of natural minerals. The report also explores the connection between economic growth and pollution, citing studies on various countries and offering recommendations for sustainable development. The report concludes by summarizing the key findings and emphasizing the need for a balance between economic progress and environmental protection. Figures and tables are included to support the analysis.

Running head: ECONOMIC GROWTH AND INDUSTRIAL POLLUTION 0
Business Research

ECONOMIC GROWTH AND INDUSTRIAL POLLUTION 1
Table of Contents
Introduction................................................................................................................................2
Project Objective........................................................................................................................3
Project Scope..............................................................................................................................3
Literature Review.......................................................................................................................4
Industrial Pollution Cause..........................................................................................................4
Nonexistence of Strict Policies..............................................................................................5
Implementation of Old Technology.......................................................................................5
Small Scale Industry..............................................................................................................5
Waste Disposal System..........................................................................................................5
Usage of Natural Mineral.......................................................................................................6
Greenhouse Gases..................................................................................................................6
Poor usage of Land.................................................................................................................6
Relation between Economic Growth and Pollution...................................................................6
Studies on Various Countries.....................................................................................................8
Recommendations......................................................................................................................9
Conclusion................................................................................................................................11
References................................................................................................................................12
Appendix..................................................................................................................................15
List of Figures
Figure 1: Industries with most CO2 emission..........................................................................15
Figure 2: Air Pollution in Countries.........................................................................................15
Figure 3: Environmental Engel curves of US (1984 and 2002)...............................................16
Figure 4: Environmental Kuznets Curve..................................................................................16

ECONOMIC GROWTH AND INDUSTRIAL POLLUTION 2
Introduction
Due to industrialisation and globalisation, the social economy has developed at a significantly
high rate. With this advancement, many of world’s natural resources are facing the risk of
scarcity. Due to this, using natural resources for industries manufacturing and pressure for
protecting natural resources has grown significantly. The development of a country’s
economy has a direct relationship to the pollution caused by the industries. The growth of
industries has led to degradation of the environment. The progress in the economy leads to
better living conditions for people, but due to the pollution in the environment, the health
condition has dropped. Many experts believe that the increase in growth leads to higher
demand for a cleaner environment. The impact of industrial pollution can be seen in different
countries such as the United States, China, India, and many Mediterranean countries. To
resolve these issues, the government are formulating various laws and regulations for
industries.
In recent years, many types of research are conducted to determine the relationship between
economic progress and pollution in the environment. This report is focused on analysing the
relationship between a country’s economic progress and the pollution caused by industries.
The relationship will be evaluated from the perspective of various developed and developing
countries.

ECONOMIC GROWTH AND INDUSTRIAL POLLUTION 3
Project Objective
The primary objective of this research is to analyse the relationship between economic
growth and the pollution caused by activities of industries. The research will be focused on
the evaluation of the impact of industrial pollution on different countries. The report will
include different theories and research conducted by various experts on the same topic. The
secondary objective of this report is to provide recommendations for rapid economic growth
of countries without enhancing the rate of pollution by industries.
Project Scope
The report focuses on the perspective of different countries and their relation between
progress and pollution. The examples of United States, China, India and Mediterranean
countries, will be taken to understand the effect of pollution and its assistance in the growth
of the economy. Various theories and research conducted by an expert on the same topic will
be evaluated as well, to get a deep understand of the topic. The recommendation for reducing
industrial pollution shall be provided to different countries.

ECONOMIC GROWTH AND INDUSTRIAL POLLUTION 4
Literature Review
In modern times, industries of a country assist in the rapid development of its economy and
also aid in enhancing the living standard of its peoples. Due to industrialisation and
urbanisation, the number of industries has grown substantially. According to Panayotou
(2016), many countries give encouragement and support to these industries because they
assist in enhancing gross domestic product (GDP) of the country. The products of industries
are exported and imported by countries to enhance their global footprint. According to CIA
World Factbook, 2016, China, European Union, United States, Japan, Germany, and India,
are the key players in industrial outputs.
As per Omoju (2014), with the advancement in economic growth, the rate of pollution has
also been increased in various countries. The living conditions of peoples have improved
significantly, but the increased rate of pollution caused different health hazards for peoples.
There have been many types of research to understand the relationship between economic
progress and pollution, but the evidence of economic progress directly related to increase in
pollution has been conflicting. There are several reports proving the impact of progress has
enhanced the amount of pollution in countries, due to excessive use of resources which are
harmful to the environment. But in modern times, the government has formulated strict
policies for industries to use natural resources for manufacturing which reduce pollution in
the environment.
According to Bella (2003), after achieving economic growth, the demand for clear
atmosphere increased in a country. The government is required to formulate strict pollution
policies and the industries are required to use efficient and natural energy sources of
production. The primary change happens in the perception of consumers since they prefer
cleaner environment. The customers use pollution free product, forcing industries to
manufacture products without polluting the environment. But experts believe that this process
can reverse without proper implementation of economic, urban and energy regulations.
Industrial Pollution Cause
In order to enhance their economic growth, countries promote their industrial manufacturing
because it allows them to trade products with developed countries. The promotion of
industries enhances countries net income and GDP. There are several factors of industries

ECONOMIC GROWTH AND INDUSTRIAL POLLUTION 5
that enhance the amount of different pollution, such as air pollution, water pollution, and
sound pollution.
Nonexistence of Strict Policies
According to Markowitz and Rosner (2013), in order to enhance their net income and GDP,
various countries promote and support the working of industries, which allow them to operate
their business according to them. Many companies avoid the policies created for the
preservation of the environment. The government did not strictly apply their pollution control
regulations over the industries to enhance their profits. It is necessary for industries to
manufacture at maximum rate to achieve economic growth.
Implementation of Old Technology
Schnelle, Dunn, and Ternes (2015) provided that, most of the industries in developing
countries, such as India, China, South Africa and Swaziland, do not have the latest
technology for the manufacturing process. These industries implement outdated technologies
in the manufacturing process which eventually enhance the rate of pollution. Modern
machinery is capable of reducing pollution to some degree but the majority of industries are
not able to use them in their process.
Small Scale Industry
The number of small scale industry is significantly high in many countries. Loehr (2012)
provided that, these countries often escape the environmental policies created by the
government since they have small operations. Small industries in countries, such as South
Africa, have to use natural minerals for manufacturing of products, which are hazardous to
the environment and causes soil and water pollution (Muduli, Govindan, Barve and Geng
2013).
Waste Disposal System
The research conducted by Hellawell (2012) provided that, the primary reason for water
pollution ns soil pollution is the ineffective waste disposal system of industries. Usually,
companies drop their manufacturing waste in fresh water sources such as lakes, rivers, and
oceans. Due to this wastage, the sea life also gets affected and dies because of the harmful
chemicals. Harmful chemicals such as Mercury, Asbestos, Lead, and Sulphur, cause high
damage to people’s health like cancer.

ECONOMIC GROWTH AND INDUSTRIAL POLLUTION 6
Usage of Natural Mineral
According to the book of Harris and Roach (2013), to enhance their reduction rates,
companies often use natural minerals taken from the earth. These minerals cause soil
pollution if they dropped over the surface of the earth. Govind and Madhuri (2014) provided
that, the oil spills from vessels can be hazardous for marine life.
Greenhouse Gases
According to Hamit-Haggar (2012), the cause of global warming is Carbon dioxide (CO2)
gas which has the capability of absorbing thermal radiation. This cause climate change and
global warming in the world. Generally, the energy used by industries emits a large quantity
of carbon dioxide gas in the environment, which causes CO2 emission. Although the CO2
emission rate has dropped in past decade, still industries are the primary source of
contributing carbon dioxide and greenhouse gases in the environment (Shahbaz, Tiwari and
Nasir 2013).
Poor usage of Land
As per the research of Wang, Chen, and Peng (2016), many industries did not properly plan
their disposal system or location efficiency at the time of establishment. Most of the
industrial townships are established without any effective planning, which made it difficult
for industries to manage their disposals and proper utilisation of energy. Most industrial
townships are situated near highly populated areas or near fresh water sources because it
helps industries to get cheap labour and free disposal systems.
Relation between Economic Growth and Pollution
As we have seen above there are several reasons for increasing rate of population in the
environment. Many of these reasons are affected due to the economic growth of countries.
For example, in order to enhance their economic progress, countries promote small scale
industries, which are high contributors to industrial pollution. Many countries usually provide
land for industrial townships near fresh water sources which cause water pollution. To
enhance their benefits countries do not strictly apply pollution regulation on industries (High
2015).
Many experts such as Taylor (2014), suggested that in order to enhance their productions,
industries are required to utilise a large number of natural sources. Countries such as South

ECONOMIC GROWTH AND INDUSTRIAL POLLUTION 7
Africa are highly dependent on natural resources for their industrial productions. Increase in
usage of natural resources lead to the production of large quantity of waste and garbage, and
lack effective waste disposal system causes pollution (Chen, Ebenstein, Greenstone and Li
2013). This waste decreases the overall living quality of peoples in a country. Hu and Cheng
(2013), argues that pollution puts whole country’s economy at threat, therefore, it is
necessary for countries to focus on natural resources preservation instead of rapid economic
growth.
At the same time, many experts have completely opposite theories regarding the relationship
between economic progress and pollution. They believed that in order to enhance the quality
of the environment, it is necessary for countries to increase their economic growth rate. With
the increase in income, the demand for quality goods and services, and overall environmental
quality increase as well. The economic growth will lead the government to establish strict
environmental protection policies over industries. Kaika and Zervas (2013), argues that, in
the longer run, the rise in income will lead to improvement in an atmosphere of the country.
Al-mulali and Tang (2013), believes that low economic growth is the reason of decrease in
quality of atmosphere of a country.
Other than these experts, there are several other experts who claim that relation of economic
progress and pollution can be both positive and negative because it is depending upon the
development of a country. They believed that if the growth of a country reached a certain
level, where the demand for efficient infrastructure and clean atmosphere increases. As
mentioned by Kuznets, the economic progress and environment growth formed an inverted U
form, which is called “Environmental Kuznets Curve” (Figure 4). According to this curve, in
the beginning of growth, the pollution level is limited but along with the advancements in
industries, it rises to the top since usage of resources increase wastage (Shahbaz, Lean and
Shabbir 2012). But, after achieving a high enough growth rate, the perception of peoples and
government changes, which increase the demand of cleaner environment. The country
achieved this by implementing efficient energy sources and efficient wastage disposal
systems. The research of Lau, Choong, and Eng (2014) provided that, this change increases
the quality of the environment and stabilise the pollution.

ECONOMIC GROWTH AND INDUSTRIAL POLLUTION 8
Studies on Various Countries
In order to determine the relation of economic progress and pollution, it is important to
ascertain different example of countries. The primary countries with high industrial resources
include United States, China, India, South Africa and many European countries. Many
research has conducted on these countries to ascertain industrial pollution retain with their
growth.
In case of China, it is the largest developing country worldwide. There are a large number of
industries established in China which contributes more than 72 percent of their GDP. A
research conducted by Lou and et.al. (2014) provided that, the pollution rate of China is
significantly high, but just like London, due to environmental Kuznets curve, the rate of
pollution is decreasing in China. In starting of Chinese development the industries use natural
resources which cause a high amount of air pollution (Figure 2). But after the output of
industries reached 45,000 to 70,000 Yuan’s, the rate of industrial pollution started decreasing.
In China, the demand for clean air has increased as well, which leads to efficient use of
natural resources and adoption of strict pollution policies by government. With the help of
innovation in modern technologies and implementing of pollution policies of the 1990s, the
rate of pollution has reduced in 31 cities of China. This downgrade establishes the effect of
inverted U form between economic progress and pollution.
In a research conducted by Acar and Tekce (2014) in Mediterranean countries, the relation of
economic growth and pollution has been established. The research provided that
Mediterranean countries are one of the richest as well as one of the vulnerable places. In
order to achieve economic growth the industries, such as iron, steel chemical and much more,
use fossil fuels, causing growth in carbon dioxide emissions in the atmosphere (Figure 1).
The research shows an S shaped curve in the relation between GDP per capita and carbon
dioxide emission per capita. But after achieving a certain level of growth, the S shape
disappeared. The research has shown that the rate of pollution decreases after achieving a
certain level of growth, in selected Mediterranean countries. But the research also provided a
risk of reversal in the curve, if the suitable urban, economic and energy regulations are not
maintained.
In a study conducted by Levinson (2015) over the United States, the GDP has doubled in
previous 30 years while the rate of pollution caused has decreased. This proves the principles
of environmental Kuznets curve but it also shows the requirement of strict environmental

ECONOMIC GROWTH AND INDUSTRIAL POLLUTION 9
regulations. The research provided that rich household help in reduction of pollution, by
consuming less pollution causing products. The household of 2002 is less polluting than the
similar income households of 1984 (Figure 3). The research established that this change in
the United States has caused due to modifications in producing technology. However, the
research provided that, the main change comes due to modification in consumer consumption
instead of rising in income, and this has caused due to partial effects of change in consumer
preferences and strict implementation of environmental policies.
Recommendations
As we have seen above, the growth of economic causes high rate of industrial pollution, but
after achieving a certain level of growth, the rate of pollution starts dropping in countries.
Following recommendations can be applied by countries to ensure low pollution growth
while achieving their growth target:
 It is necessary for countries to apply strict pollution regulations over small and large
industries. The strict regulation will reduce the carbon dioxide emission which is the
primary cause of pollution. The strict regulations to reduce the growth rate of
countries but it is better for countries to achieve their target a little later than
achieving it with a high rate of pollution.
 The land provides for industrial townships should have a proper system for disposal
of waste. This would reduce the dumping of wastage in fresh water sources and
improves the marine life. The improved disposal system will reduce soil pollution
since industries would not have to drop natural waste on lands (Fuji, Managi and
Kaneko 2013).
 It is necessary for countries, such as South Africa and India, who did not have access
to the latest technology, to implement the latest technology in their operations. They
should take help from worldwide organisations and countries to adopt the latest
technologies in their industrial operations (Mowery, Nelson, Sampat and Ziedonis
2015).
 Use of natural energy in the industrial manufacturing process, such as solar energy or
Wind energy, will help in conservation of natural resources and reduce the rate of
pollution in the country. Many large organisations such as Apple and Google are
using solar energy to power their factoring and offices in China and US (Carmen and
Daniela 2012).

ECONOMIC GROWTH AND INDUSTRIAL POLLUTION 10
 Encouraging and educating the customers for using such product which did not
pollute the environment while manufacturing. The key part of reducing pollution is
related to change in consumer preferences and usage of polluting products.

ECONOMIC GROWTH AND INDUSTRIAL POLLUTION 11
Conclusion
The above report concluded that economic growth does increase the rate of industrial
pollution in a country. The industries use inefficient method for manufacturing which is
hazardous for the environment. The government did not apply strict pollution regulations
over the industries for their own benefits, which lead to a significantly high rate of pollution
in a developing country. But as per environmental Kuznets curve, the rate of pollution started
decreasing once the country achieved a high level of economic growth. The reason for this
decrease is that in the beginning of economic growth the income level of consumers is low
and industries use natural minerals to manufacturers cheap products. This helps in the
production of low quality and low-cost product that cause a high rate of pollution. But, the
perception of consumers changes after high growth in country’s economy. The consumer
prefers to use high-quality products that did not pollute the environment and the demand for
clear atmosphere increases.
This proves the relationship between economic progress and pollution caused due to
industries. In order to maintain a low pollution rate in high economy countries, it is necessary
to constantly maintain the economic, urban and energy policies of industries. The report
provided that economic growth causes pollution in a country, but after achieving such growth
a country can reduce their pollution rates.

ECONOMIC GROWTH AND INDUSTRIAL POLLUTION 12
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ECONOMIC GROWTH AND INDUSTRIAL POLLUTION 15
Appendix
Figure 1: Industries with most CO2 emission
(Source: Acar and Tekce 2014)
Figure 2: Air Pollution in Countries
(Source: Vidal 2016)

ECONOMIC GROWTH AND INDUSTRIAL POLLUTION 16
Figure 3: Environmental Engel curves of US (1984 and 2002)
(Source: Levinson 2015)
Figure 4: Environmental Kuznets Curve
(Source: Shaw 2012)