Can importing improve the energy efficiency? Theory and evidence from Chinese industrial firms

Importing is an important method to connect the domestic market with international market. By importing energy resources to replace parts of domestic production, a country's energy pressure has been alleviated to a certain extent, but does importing really improve a country's energy efficiency? This issue is extremely important both in theory and in practice. Thus, in this paper, we first establish a micro theoretical trade model to analyze the impacts of importing on firms' energy efficiency. Then, based on the data of China's industrial firms, this paper systematically identifies the causal effect of firms' importing behavior on their energy efficiency by using Propensity Score Matching-Difference (PSM-DID) in differences method. The results show that firms' importing behavior can significantly improve their energy efficiency, and this positive effect has a certain persistence in time. At the same time, the further mechanism test shows that importing can significantly increase firms' innovation investment and improve firms' productivity, thus importing can improve firms' energy efficiency through innovation investment effect and productivity effect. This paper verifies that importing can improve firms' energy efficiency, and reveals the importance of importing on a country's development from the perspective of energy resources and environment. This paper helps to provide relevant policy reference for the formulation and adjustment of the country's foreign trade policy.