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‘Green’ productivity growth in China's industrial economy

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  • Chen, Shiyi
  • Golley, Jane

Abstract

This paper uses a Directional Distance Function (DDF) and the Malmquist–Luenberger Productivity Index to estimate the changing patterns of ‘green’ total factor productivity (GTFP) growth of 38 Chinese industrial sectors during the period 1980–2010. Unlike the measures of traditional total factor productivity (TFP) growth, the DDF incorporates carbon dioxide emissions as an undesirable output directly into the production technology, which credit sectors for simultaneously reducing their emissions and increasing their output. Our estimates of aggregate and sector-level GTFP growth reveal that Chinese industry is not yet on the path towards sustainable, low-carbon growth. A dynamic panel data analysis of the determinants of GTFP across sectors is used to identify factors that might rectify this situation, including state owned enterprise (SOE) reform, the growth of small private enterprises, continued openness to foreign investment and higher spending on R&D, particularly in emission-intensive sectors.

Suggested Citation

  • Chen, Shiyi & Golley, Jane, 2014. "‘Green’ productivity growth in China's industrial economy," Energy Economics, Elsevier, vol. 44(C), pages 89-98.
    • Handle: RePEc:eee:eneeco:v:44:y:2014:i:c:p:89-98
    DOI: 10.1016/j.eneco.2014.04.002
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    References listed on IDEAS

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    More about this item

    Keywords

    China; Industry; Carbon dioxide emissions; Undesirable output; ‘Green’ TFP growth; Reform;
    All these keywords.

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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