Industrial agglomeration, technological innovation and carbon productivity: Evidence from China

Abstract Industrial agglomeration and technological innovation are considered significant mechanisms to affect carbon productivity. This paper investigates the relationship between heterogeneous industrial agglomeration, technological innovation and carbon productivity using the Dynamic Spatial Durbin Model based on panel data of the industrial sector of 30 Chinese provinces from 1998 to 2017. The results show that: overall, there is an inverted “U” relationship between industrial agglomeration and carbon productivity, and technological innovation plays an important role in determining the “inflection point”. The impact of technological innovation upon industrial agglomeration as well as on carbon productivity is different under different types of industrial agglomerations and different regions. Compared with the general technological innovation, low-carbon technological innovation has a larger impact on carbon productivity, whilst its potential to improve the situation has not been fully realized. Carbon productivity has significant path-dependent characteristics and, together with industrial agglomeration and technological innovation, they all have significant spatial spillover effects. Both theoretical and practical significance have drawn from this paper, in particular for China, to optimize the efficiency through spatial reforming of industrial agglomerations to maintain economic growth and increase the total carbon productivity from the long run.