The role of green production process innovation in green manufacturing: empirical evidence from OECD countries

Under the climate change background, green manufacturing is a critical path to realizing a low-carbon economy. The role of green products from manufacturing in economy-wide green transition has been discussed in the literature. In contrast, innovation in the industrial process, an important driver of climate change, has seldom been studied. This paper investigates the impact of green production process innovation on green manufacturing production using a fixed-effect SFA model. Furthermore, we discuss whether the impact of green production process innovation is conditioned on the economic development level, using a newly developed partial linear functional model. The results show that green production process innovation benefits green manufacturing, promoting sectoral carbon and energy efficiency. This paper further proposes policy implications, based on the findings that the green production process innovation’s marginal effects vary with economic development level.