Producer services development and manufacturing carbon intensity: Evidence from an international perspective

Abstract

Reducing the carbon intensity of manufacturing is pivotal to meeting international carbon reduction targets aimed at mitigating global warming. This paper originally investigates the implications of producer services development (PSD) on the carbon intensity of manufacturing. We first evolved an approach to quantify the indirect role of producer services in reducing the carbon intensity of manufacturing. Empirical tests are then carried out using data from 18 manufacturing sectors in 42 countries from 2000 to 2014. The results demonstrate that domestic PSD reduces the carbon intensity of manufacturing sectors, but this effect is significant only in the sectors with high embedment of producer services, both domestic and foreign producer services. By deeply embedded in manufacturing, the development of producer services improves the energy structure and energy efficiency of the manufacturing sector, thereby reducing its carbon intensity. In addition, among producer services, the development and embedment of the information and communication sector has a more pronounced impact on reducing the carbon intensity of manufacturing. Our findings are informative and insightful for coordinating inter-sector development and implementing climate change mitigation measures.