Accounting and determinants analysis of China's provincial total factor productivity considering carbon emissions

Abstract One of the most undesirable output of China's rapid economic growth has been increasing carbon emissions. This study measures and analyzes the impact of carbon emissions on China's regional total factor productivity from 2000 to 2017. Using global Malmquist-Luenberger productivity indexes, we re-estimate the provincial total factor productivity taking carbon emission into account, comparing different assumptions of returns to scale and considering the rank reverse issue. The differences of technical progress and efficiency change across Chinese regional economies are also investigated and we found that the former was the primary contributor to improved Chinese provincial productivity performance. In addition, we analyze the influencing factors of productivity based on provincial panel data. Our results indicate that innovation capacity, energy and employment structure had significant impact on the provincial productivities while urbanization had a negative impact. A more sustainable development can be expected by expanding regional investment in R&D, adjusting and optimizing structures of regional industries and energies.