Embedded carbon emissions in the inter-industrial sectors of China: A new analysis of total factor productivity and...

The proposal of carbon neutrality has highlighted the growing significance of synergizing carbon reduction and total factor productivity (TFP) growth in China's industrial sectors. This paper introduces a theoretical innovation by incorporating the energy and carbon emissions (CEs) space into the Cobb-Douglas (C-D) production function as a measurement indicator, which avoids the potential bias in TFP measurement that may arise when considering only direct CEs. It fills a gap in the measurement of TFP, which includes both implied and direct CEs. It complements theoretical models of TFP. The TFP indicator can be measured more accurately, which helps to fully account for environmental costs and resource use in economic activities. In this paper, an extended model for measuring TFP is constructed using the non-competitive input-output model (NCIO model) and the Manquist-Luenberger index (DML) based on the directional distance function. These models provide a systematic analysis of the TFP and capacity utilization of China's industrial sectors from an embodied perspective. The findings of the study are as follows: (1) The growth of TFP from the embodied perspective (IDML) in China's industrial sector is 7.97 %. (2) TFP growth from the direct perspective (SDML) in China's industrial sector is 4.16 %, which is lower than that of IDML. (3) The capacity utilization rate of industrial sectors from 2002 to 2017 was 63.4 %, showing a general tendency toward an upward trajectory, despite fluctuations. In light of these findings, the study provides a valuable reference for effectively promoting the sustainable development of industrial sectors and economic growth in alignment with the goal of carbon neutrality.