Does the Level of Absorptive Capacity Matter for Carbon Intensity? Evidence from the USA and China

Abstract

Interest in the rapid growth of CO2 emissions, together with the economic performance of various countries continues to attract researchers and practitioners’ interest. Alongside, concerns regarding global warming and its effects on human and animal health, and thus sustainable development, escalate. The present study employs the nonlinear autoregressive distributed lag to identify short- and long-run dynamics and the asymmetric nexus between absorptive capacity, and CO2 emissions intensity from 1970 to 2018 in the case of the USA and China. In the short-run, an increase in technology transfer based on human resources increases CO2 emissions in China. Contrarily, the decrease in technology transfer based on infrastructure has an emissions-decreasing effect in China. In the long-run, the effects of an increase in absorptive capacity based on innovation and infrastructure developments provide positive and significant impetus to mitigate the carbon intensity in China and the USA. The results are robust using GHG intensity. Thus, policymakers and researchers have to consider the pivotal role of absorptive capacity in facilitating sustainable development.