Complexity of domestic production fragmentation and its impact on pollution emissions: Evidence from decomposed regional production length

By embedding multi-regional input-output tables into transnational input-output tables and using production length as a measure to reflect the complexity of production at the subnational level, this paper investigates the impact of the intensified domestic production network on pollution emissions from the perspective of eight major Chinese regions. The findings show that a strengthened domestic production network can significantly reduce pollution emissions and that this result is robust to a series of model specifications. By decomposing the domestic production network of each region into intra-regional, inter-regional, and international linkages, it shows that international link plays a decisive role in reducing the pollution produced by the aggregate domestic production network on a regional scale. By contrast, intensified intra-regional production linkage incurs pollution, especially in inland regions with abundant primary energy resources and heavy pollution industries transferred via inter-regional production networks from the coastal regions in the early stage.