Industrial structure, energy intensity and environmental efficiency across developed and developing economies: The intermediary role of primary, secondary and tertiary industry

This article contributes to the existing literature by examining the nonlinear relationship between industrial structure, energy intensity and environmental efficiency across developed and developing countries by utilizing three sectors of industry i.e., Primary, Secondary and Tertiary industry. Panel data includes 64 Belt and Road Initiative (BRI) from 2000 to 2017, which are further divided into two groups of developed and developing countries. SBM-DEA model is employed to measure the environmental efficiency. Random effect (RE) and Fixed effect (FE) models are employed as basic estimating techniques, while IV-GMM (Generalized Method of Moments) is utilized as robust estimator to handle endogeneity problem. The results of SBM-DEA model show that the environmental efficiency of BRI countries has deteriorated over the years. However, developed countries have the higher average environmental efficiency than developing countries. The results further show that all three sectors of industry deteriorate environmental efficiency. However, the negative impact of secondary industry on environment is more severe than primary and tertiary industry particularly across developing countries. Furthermore, a nonlinear U-shaped curve is confirmed only between secondary industry and environmental efficiency across developed countries. Our findings suggest that adopting industrial agglomeration approach and restructuring energy system can improve environmental efficiency.