Equilibrium in Action: Unveiling SDG 10 Through Inequality and Sustainable Economic Growth

Abstract

In the context of the intricate challenges inherent in sustainable development, the imperative to maintain a delicate equilibrium between sustainable economic growth and the attainment of SDG 10 (reducing inequalities) poses a significant and complex endeavor. Against this backdrop, this study examines the relationship between economic growth and regional inequality, utilizing satellite-based nighttime light data. This study focuses on the Province Managing County (PMC) reform policy implemented in China in 2003, examining its role in fostering economic growth and addressing regional inequalities through a quasi-natural experiment. The analysis reveals that while the PMC policy contributed to economic growth, it also had a negative impact on regional inequality. The analysis further reveals significant heterogeneity in the reform's effects, marked by increased inequality and accelerated growth in the eastern region, contrasted with reduced inequality in the west. Additionally, the study investigates the underlying mechanisms, finding that county-level development expenditures rose following the policy change, while spending on social services such as education and healthcare declined. This indicates that heightened investment in infrastructure development spurred economic growth, albeit at the cost of amplifying regional disparities.