Interaction and mediation effects of economic growth and innovation performance on carbon emissions: Insights from 282 Chinese cities

Abstract

China is under rapid urbanization and consequently facing increasing carbon emissions (CE). Economic growth (EG) and innovation performance (IP), as two critical indicators of urbanization, are considered the driving forces of CE. Although economy and innovation are entangled and can jointly affect CE in reality, the measured effects of economy and innovation on CE are often treated separately in traditional studies. We adopted a three-part research framework including the total, interaction and mediation effect tests to elucidate how EG and IP affected CE in China from 2005 to 2015 based on insights from 282 Chinese cities. The empirical results showed that both economy and innovation contributed to CE, although the contribution has reduced over the 11 years. In particular, the interaction effect between economy and innovation for North China, Northeast China, and Southwest China was -4.201, -8.442, and - 3.897, respectively, in 2015, meaning that these regions adversely affect CE. In addition, we found that the economy helps reduce CE via innovation. When considering the changes of economy and innovation, their mediation effect on CE changes varied in different regions, attributable to the level of economy and innovation as well as the stocks of energy resources. Therefore, future planning for low-carbon transition should regard the economy and innovation together. Based on this principle, we propose five detailed policies. Overall, this study is valuable not only for further understanding the triangle relationship among economy, innovation, and CE, but also for reaching low-carbon goals.

Keywords: Carbon emissions; Chinese cities; Economic growth; Innovation performance; Interaction effect; Mediation effect.