Sustainable development and industrial development: manufacturing environmental performance, technology and consumption/production perspectives

Industrial development has always been seen as the main engine for economic growth due to its large economic multiplier and technological opportunities. However, manufacturing sectors are directly and indirectly responsible for a large share of overall environmental pressures, raising concerns for the environmental sustainability of manufacturing-based development. In this paper, we evaluate the drivers and decoupling trends of environmental pressures arising (directly or indirectly) from manufacturing production and consumption for a large selection of developed and developing countries. As a first step, we decompose changes in emission intensity of manufacturing sectors into a series of components by means of a shift-share analysis to identify the main drivers of change. A second step will compare direct environmental pressures generated by manufacturing sectors (production perspective) with the amount of emissions generated (domestically and abroad) by the domestic consumption of manufacturing goods (consumption perspective). Finally, we evaluate the possible emergence of an environmental Kuznets curve (EKC) dynamics for production and consumption perspective emissions for the world as a whole and for different continents. Results highlight that first, high income countries are generally more environmental friendly than the average and tend to be specialised in high-tech and greener sectors. Second, emission reduction is driven mainly by unobserved factors such as institutional quality and policy commitment. Finally, while production perspective shows some evidence of EKC dynamics, this result does not hold when shifting to the consumption perspective. Besides, some world area is able to compensate the growth effect exploiting technology dynamics.