Structural transformation of manufacturing, natural resource dependence, and carbon emissions reduction: Evidence of a threshold effect from China

Abstract

Natural resource endowment has a significant influence on manufacturing structure which in turn influences CO2 emissions. This paper investigates the effect of the rationalization and upgrading of manufacturing structure on carbon dioxide emissions in China, based on the perspective of natural resource dependence. The results of the STIRPAT model on provincial panel data of the manufacturing sector from 2003 to 2014 show that manufacturing structure rationalization and upgrading will help curb CO2 emissions, while such effects are restricted by a region's reliance on natural resources. The panel threshold model estimations further indicate that the greater the ratio of industrial output to GDP, the weaker the restricting effect of resource dependence on the emissions reduction of manufacturing structure. These findings reveal that the development strategies of manufacturing structural rationalization and upgrading that aim to reduce emissions depend on the level of a region's resource dependence and industrialization.