Extending production-theoretical decomposition analysis to environmentally sensitive growth: Case study of Belt and Road Initiative countries

Abstract

Exploring the driving factors of environmentally sensitive growth in Belt and Road Initiative (BRI) countries is crucial to the green BRI and realizing sustainable development goals. This study extends the production-theoretical decomposition analysis framework to environmentally sensitive growth. Using data from 52 BRI countries from 1992 to 2014, the proposed approach decomposes environmentally sensitive growth change into productivity growth effect, input change effect, and potential output change effect. We find that the potential output change effect plays the most significant role, followed by the input change effect, while the productivity growth effect does not contribute significantly to environmentally sensitive growth. These three effects are further decomposed into seven driving factors. Within the potential output change effect, the contribution of the potential GDP change factor is greater than the contribution of the carbon dioxide emissions change factor. The energy change factor contributes most to environmentally sensitive growth among the input change effects. Additionally, the technical efficiency change factor is more significant for the productivity growth effect than the best practice gap change factor. The findings suggest that advocating low-carbon infrastructure investment, exerting the spillover effect of technology, and adopting a low carbon development national strategy are policies toward achieving the Sustainable Development Goals.