Industrial agglomeration, FDI, and carbon emissions: new evidence from China's service industry

In the context of economic servitization and low carbonization, the problem of carbon emissions in the service industry is worthy of attention. An essential channel for restraining carbon emissions from the service industry is industrial agglomeration. Based on provincial panel data from 2004 to 2021 in China, this study empirically analyzes the influence of the service industry's agglomeration on its CO2 emissions. The findings indicate that agglomeration significantly reduces the industry's carbon emissions. Next, producer services agglomeration has a significant carbon-reduction effect, whereas non-producer services agglomeration does not. Moreover, service industry agglomeration helps to restrain carbon emissions from the service industry in East China. However, it does not significantly affect carbon emissions in Central or West China. Regarding the moderating effect, foreign direct investment can enhance service industry agglomeration's carbon-reduction effect. Based on the results, relevant policy implications are provided.