A study of low-carbon development, urban innovation and industrial structure upgrading in China

Abstract

Abstract This paper, based on the panel data of 281 prefecture-level cities in China, applies the difference-in-differences (DID) approach and the propensity score matching DID (PSM-DID) approach to an empirical study on the impacts of the low-carbon pilot program on industrial structure. It concludes that the program has contributed significantly to more rational industrial structures of pilot areas. The study shows that pilot areas have more rational industrial structures than non-pilot areas, recording an increase of 0.058 units in average rational level. This conclusion holds under various robustness tests. Further heterogeneity analysis suggests that the low-carbon pilot program has notably boosted the rational levels of industrial structures of cities in central China and small cities, while less so for other parts of China or other larger cities. Mechanism test shows that low-carbon cities have realized industrial structure upgrading by facilitating urban innovation. In light of this, the low-carbon pilot program should be further put in place steadily with a focus on tailoring pilot policies to local conditions and enhancing their economic adaptability. The role of the program in optimizing industrial structure should be fully leveraged to effectively add to efforts in actively exploring green, low-carbon sustainable development of economy and pulling off the transformation of both economic structure and energy mix.