Role of low-carbon technology innovation in environmental performance of manufacturing: evidence from OECD countries

Shi, Rui; Cui, Yu; Zhao, Minjuan

Role of low-carbon technology innovation in environmental performance of manufacturing: evidence from OECD countries

2021

Shi, Rui | Cui, Yu | Zhao, Minjuan

Climate change disrupts the balance of natural ecosystems and threatens the sustainable development of human society. As the leading industry in many countries, manufacturing promotes economic growth; unfortunately, it also emits large quantities of greenhouse gases. Thus, it is necessary to transform the production pattern of manufacturing into green production. Although technology innovation is the only way to tackle the issue, different types of technology innovation may lead to various environmental performances. We argue that low-carbon technology innovation (LCTI) is the key to green production. Using data of Economic Co-operation and Development (OECD) countries from 1990 to 2014, we use the patent-stock method to measure LCTI levels and analyze its development trend in OECD countries. Based on the shepherd distance function, we measure carbon efficiency and carbon productivity by the fixed-effect Stochastic Frontier Analysis (SFA) model. Then we investigate the effect of LCTI on carbon emission efficiency in manufacturing by the fixed-effect regression model. After controlling some variables, evidence shows a significant positive influence of LCTI on the environmental performance of manufacturing. The level of LCTI constantly increased in OECD countries during the study period. Among these countries, the level of low-carbon technology in the chemical industry is the highest; in most countries, the low-carbon technology of the production process grows fastest. Policy implications are further discussed.

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