The impact of development zone upgrading on carbon emission reduction: examining China's regional development policies

Development Zone Upgrading (DZU) policy is a green location-oriented policy in developing countries and underdeveloped regions, established for industrial upgrading and green transformation. Based on panel data from 2004 to 2016 and the staggered difference-in-difference model, we explore the impact of this upgrading policy on carbon emission reduction and the mechanism underlying this effect. We find the DZU policy has a positive impact on carbon productivity and green innovation, which are reliable to a series of robustness tests. The mechanism analysis demonstrates that the DZU policy promotes carbon productivity and green innovation by addressing capital misallocation and enhancing environment regulation. Heterogeneity analysis indicates that the improvements resulting from DZU are more prominent in cities where local officials face higher promotion pressure and in cities with a higher degree of marketization. The findings of this study demonstrate the efficacy of regional green development-oriented policies in reducing regional carbon emissions, and have policy implications for economically underdeveloped areas.