Greening manufacturing: Technology intensity and carbon dioxide emissions in developing countries

Abstract

Industrialisation is an important engine of growth and ‘catch up’, but also associated with harmful carbon dioxide emissions and hence with climate change. This poses a challenge for sustainable industrial development, particularly for late industrialisers on how to industrialise while also mitigating carbon dioxide emissions. This paper investigates the effect of technology intensity across manufacturing industries on carbon dioxide emissions: are medium- and high-technology manufacturing industries less emissions-intensive than low-technology manufacturing industries in developing countries? The paper analyses this relationship for a panel of 68 developing and emerging economies over the period 1990–2016, by adapting the environmental Kuznets curve and the stochastic effect by regression on population, affluence and technology approaches. Using two alternative measures of emissions and estimating generalised method of moments model, the results show that medium- and high-technology manufacturing industries are associated with lower carbon dioxide emissions than low-technology manufacturing industries. The results also show that these differences vary by the income levels of countries. These findings have important policy implications, suggesting that a shift towards more technology-intensive manufacturing production processes may be a more environmentally sustainable industrialisation path for developing countries.