Study on carbon emission reduction effect of institutional openness in China

Abstract

As the main means to dovetail the domestic system with international rules, institutional openness is the key to deepening participation in the global economic governance system, breaking through energy and carbon emission constraints, and achieving green and sustainable economic development. Taking 284 prefecture-level cities in China from 2006 to 2019 as the research sample, this paper uses the establishment of Pilot Free Trade Zones as a quasi-natural experiment to systematically identify and test the actual impact of institutional openness on urban carbon emissions in China through the asymptotic difference in difference method, instrumental variables method, spatial econometric model, and mediating effects model. Meanwhile, technological progress is used as the entry point to analyze the intrinsic mechanism of action by adopting digital transformation oriented to efficiency improvement and green innovation capability oriented to R&D innovation as the differentiated perspective. It is found that institutional openness significantly suppresses urban CO2 emissions, and there is a certain heterogeneity and spatial spillover effect of this effect. Further study finds that institutional openness achieves carbon emission reduction through technological progress. The study aims to find new institutional innovation and development paths for low carbon development.