Impact of urbanization on energy intensity by adopting a new technique for regional division: evidence from China

Using unbalanced data from 30 provinces in China between 1990 and 2015, this paper investigates the impact of urbanization on energy intensity with three control variables: economic growth, industrialization, and foreign direct investment. All the samples are divided into two sub-samples using a newly developed partially heterogeneous framework. For empirical estimations, we have used four models that deal with the homogeneous-heterogeneous slope with static-dynamic model specifications. Mainly, new estimation methods are used for dynamic models considering both heterogeneity and cross-sectional dependence. Empirical results show economic growth is a steady factor that decreases energy intensity. Urbanization and industrialization have a significant and positive relationship with energy intensity, which illustrates that higher urbanization impacts negatively on energy intensity. The influence of foreign direct investment is negative. Moreover, these findings vary across different model specifications and samples. The heterogeneous effects suggest regional specific policies across the provinces.