Temporal and spatial effects of manufacturing agglomeration on CO2 emissions: evidence from South Korea

Abstract

Studies have shown that industrial agglomeration has a facilitating effect on carbon emission reduction. However, discussions on the impact of manufacturing agglomeration on emission reduction have not simultaneously considered spatial correlation and temporal continuity. Addressing this gap, this study develops a dynamic spatial econometric model rooted in agglomeration economic theory to simultaneously assess the spatial and temporal impacts of manufacturing agglomeration on carbon emission reduction. Utilizing panel data from 17 major South Korean regions from 2013 to 2019, the research investigates the internal mechanisms and spatial effects of manufacturing agglomeration on reducing carbon emissions. The findings reveal that the relationship between manufacturing agglomeration (specialization and diversification) and carbon emissions in South Korea shows an inverted U-shape. Moreover, regarding the temporal continuity of carbon emissions, in the short term, specialized agglomeration is beneficial to reduce local and neighboring carbon emissions. In the long run, the effect of specialized agglomeration on the overall carbon emission reduction is still obvious. However, diversified agglomeration can only reduce local carbon emissions in the short term, but the spillover effect on neighboring areas is not obvious. In the long run, diversified agglomeration can effectively reduce local carbon emissions, but the spillover effect on neighboring areas is still not obvious. These nuanced insights are crucial for policymakers aiming to leverage industrial agglomeration for carbon emissions reduction effectively.