What is the role of openness for China's aggregate industrial SO2 emission?: A structural analysis based on the Divisia decomposition method

Having observed the weaknesses in previous structural analyses on the role of Environmental Kuznets Curve (EKC), the author proposes a detailed analysis using a rich data set of provincial level production and SO2 emission intensity of 13 industrial sectors. The latter represent more than 98% of the total industrial production in each Chinese province for the period 1991-2001. Through the use of the log-mean Divisia Index Decomposition method, the variations in province-level industrial SO2 emissions with regard to the 1990 baseline level are decomposed into the contribution from three components: scale, composition, and technical effects. The following analysis seeks to explain how trade openness affects aggregate industrial SO2 emission through its impact on the structural determinants for these three components of region-specific environmental variations.