Alternative or complementary? Growth and environmental effects in urban manufacturing agglomeration under dual carbon goals

Abstract

In the context of China’s dual carbon goals, transforming traditional manufacturing agglomeration into green manufacturing agglomeration is pivotal in aligning economic development with environmental protection, ultimately contributing to the country’s high-quality economic growth. This study examines the dynamic nonlinear effects of manufacturing agglomeration on economic development, energy consumption, environmental pollution, and green total factor productivity. We developed a theoretical framework that considered local government constraints and incentives as transition variables and employed panel data from 280 cities at or above the prefecture level in China from 2006 to 2020 using a Panel Smooth Transition Regression model. The results reveal that, first, under both constraints and incentives, a single threshold effect exists beyond which the positive impact of manufacturing agglomeration on economic development, energy consumption, and environmental pollution gradually weakens. Second, the spatiotemporal evolution of manufacturing agglomeration shows that traditional manufacturing agglomerations are gradually spreading from the central and western regions to the resource-based regions in the eastern part of the country, while green manufacturing agglomerations are shrinking annually. Third, a comparative analysis indicates that, in both developed and developing countries, manufacturing agglomeration effects are strongest when government constraints do not exceed the threshold. However, in developing countries, when this threshold is surpassed, the momentum for green transformation becomes insufficient. Finally, digital infrastructure positively promotes the green transformation of manufacturing agglomerations, although its effects are influenced by other factors.