Can We Grow Out of Pollution? How Economic Development and Firm Location Shape Environmental Quality

For decades, economists and environmental scientists have grappled with a fundamental question: Can economic growth ultimately lead to environmental improvement? This question lies at the heart of the Environmental Kuznets Curve (EKC) hypothesis, which posits that pollution initially rises with income but eventually declines after reaching a certain income threshold. In a recent study, Wu et al. (2025) offer a novel contribution to this ongoing debate by examining how the spatial distribution of economic activity—specifically, the trade-off between firm agglomeration and dispersion—shapes the long-term relationship between economic development and environmental quality.