Innovation-driven development and urban carbon emission reduction: a quasi-natural experiment in China

Constructing a quasi-natural experiment based on China’s National Independent Innovation Demonstration Zone (NIDZ) pilot, this study applies the time-varying difference-in-differences (DID) model to estimate the impact of innovation-driven development on urban carbon emission reduction. We use panel data on 285 cities which covers 95.96% of Chinese cities during the period of 2003 to 2017. Compared with non-pilot cities, our results indicate that total carbon dioxide emissions and emission intensity of pilot cities decreased by 4.8% and 5.8%, respectively. The results suggest that the construction of NIDZs can significantly promote urban carbon emission reductions. Moreover, our mechanism tests indicate that this pilot policy can encourage technological innovation and optimize industrial structure, which in turn suppresses urban carbon dioxide emissions. Additionally, further analysis shows that the policy effect increases over years and is stronger in urban areas with higher levels of human capital, government finance, and information infrastructure. This study enriches the relevant research on carbon emission reduction.