Does the China-Korea Free Trade Area Promote the Green Total Factor Productivity of China’s Manufacturing Industry?

Purpose - The purpose of this paper is to analyze the net effect of the green total factor productivity (GTFP) of China’s manufacturing industry from the China-Korea Free Trade Area (China-Korea FTA) quantitatively. Design/methodology - Firstly, the Global Malmquist-Luenberger (GML) index based on the SBM directional distance function is used to measure the GTFP of China’s manufacturing and analyze the driving force for its growth. Secondly, the regression discontinuity quantitative analysis is used to determine the impact of the China-Korea FTA on China’s manufacturing GTFP. Findings - Our main findings can be summarized as follows: the China-Korea FTA has promoted the GTFP of China’s manufacturing with an effect evaluation mainly resulting from green technology progress. And there is industry heterogeneity in the policy effect on the manufacturing GTFP due to the China-Korea FTA. Namely, policy promotion from the China-Korea FTA is more effective on the GTFP of equipment manufacturing than it is on those of other industries. Originality/value - First, an evaluation and analysis of the GTFP development of China’s manufacturing that employs GML index based on SBM directional distance function. Second, a quantitative estimate of China-Korea FTA’s net effect on China’s manufacturing industrial GTFP that uses regression discontinuity analysis, which is considered to be the closest method to natural experiments and superior to other causal inference methods. Third, an in-depth discussion of the practical steps that China’s manufacturing can take to improve GTFP development and integrate China-Korea FTA construction into economic development.