Spatial spillover effects of manufacturing agglomeration on China's total factor carbon productivity: evidence from the regulatory role of fiscal decentralization

Based on the theory of new economic geography, this paper used panel data from 284 cities in China from 2006 to 2019 to determine the effects of spatial spillover and heterogeneity of manufacturing agglomeration (MA) on urban total factor carbon productivity (TFCP) and the regulatory effect of fiscal decentralization on the outcome. The results showed that (1) MA shifted from the eastern region of China to the central and western regions, with the center of gravity moving towards the south. The spatial pattern of urban TFCP displayed the solidifying characteristics of "low-level agglomeration and high-level dispersion," with technological progress being the primary driver. (2) The MA had a significant U-shaped effect on the TFCP of local and nearby cities, promoting the improvement of urban TFCP through Jacobs' and Porter's externalities but not MAR externalities. (3) Regarding regional differences, MA had a significant U-shaped impact on urban TFCP in the eastern and central regions. At different levels of manufacturing development, there was an inverted U-shaped relationship in both manufacturing and non-manufacturing metropolitan areas. For varying degrees of manufacturing industry agglomeration, increasing the level of MA improved urban TFCP in low agglomeration areas, but inhibited it in high agglomeration areas. (4) The implementation of fiscal decentralization nationwide and in the eastern and central regions significantly weakened the impact of MA on TFCP. Furthermore, fiscal decentralization significantly enhanced the influence of MA on TFCP in cities exhibiting high levels of economic development, advanced industrial structure and strict environmental regulations. Therefore, based on the unique developmental characteristics of the manufacturing industry in various cities, fiscal policies ought to be tailored to local circumstances to support key areas. This strategy should facilitate the high-quality development of manufacturing industry and low-carbon development of cities.