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How productive capacities influence trade-adjusted resources consumption in China: Testing resource-based EKC

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  • Xin, Yongrong
  • Ajaz, Tahseen
  • Shahzad, Mohsin
  • Luo, Jia

Abstract

A series of economic parameters may influence material footprints (resource consumption). The efficacy of a country's infrastructure for generating commodities is one of the most essential of these elements. This study contributes to determining the influence of productive capacities on trade-adjusted resource consumption in China. Using a bootstrapping autoregressive distributed lag (BARDL) model, it examines the co-integration relationship between China's material footprints (MF), productive capacity index (PCI), and economic growth from Q1-2000 to Q4-2018. The results exhibit that if PCI rises by one percent, long-term resource consumption falls by 0.298 percent while economic growth rises by 0.316 percent. In the short run, a one percent improvement in production efficiency has a comparable effect on economic growth (0.175%) and resource conservation (0.123%). Long-term resource consumption grew as per capita income rises. Moreover, the results do not support the resource-based Environmental Kuznets Curve hypothesis. Long-term estimates suggest that productive capacities have a significant impact on lowering material footprints, adding validity to the notion. The findings show stronger impacts in the long run than in the short run, consistent with the long-run transmission of economic and environmental implications, with significant convergence towards long-run equilibrium. This result implies that efficient resource management can be obtained by improving productive capacities.

Suggested Citation

  • Xin, Yongrong & Ajaz, Tahseen & Shahzad, Mohsin & Luo, Jia, 2023. "How productive capacities influence trade-adjusted resources consumption in China: Testing resource-based EKC," Resources Policy, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:jrpoli:v:81:y:2023:i:c:s0301420723000375
    DOI: 10.1016/j.resourpol.2023.103329
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