How does the one belt one road initiative affect the green economic growth?

Highlights: • The OBOR Initiative can promote the green economic growth. • The energy-saving effect is 34.5%; while the emissions-reduction effect is 36.4%. • Environmental impact on the developing countries is much greater. • Technology spillovers play the most vital role in promoting green economic growth. When formulating international trade agreements, policymakers should consider not only their trade-creation effect but also their impact on the environment. This paper is an examination of whether the One Belt One Road (OBOR) Initiative contributes to green economic growth. By combining the difference-in-difference model with the propensity score matching method and conducting a series of robustness tests, we found strong evidence to support the energy-saving and emissions-reduction effects of the OBOR Initiative. The energy-saving effect was 34.5%, while the emissions-reduction effect was 36.4%. The results of various heterogeneity tests show that developing countries tend to benefit more from the OBOR Initiative than developed ones, enjoying greater trade-creation effects. We also revealed the influencing mechanism of the policy based on the results of a mediating effect analysis, and the empirical results demonstrated that technology spillover played the most significant role in reducing levels of energy consumption and carbon emissions, followed by updates to the industrial structure and the promotion of green trade among the participating countries.