Evaluating the carbon benefits of multinational enterprises from a production linkages perspective

Multinational enterprises are essential to achieving climate goals, yet the carbon benefits of their production linkages with domestic-owned enterprises remain unclear. Here we construct an extreme counterfactual scenario and use an environmentally extended input-output model, structural path analysis and structural decomposition analysis to evaluate these benefits. The results reveal that domestic-owned enterprises-multinational enterprises production linkages cumulatively reduced carbon emissions in China by over thirteen thousand megatons from 2000 to 2020. These carbon benefits primarily originated in the energy and material sectors, especially coke and refined petroleum and basic metals, and propagated toward technology-intensive manufacturing and service industries. Carbon efficiency was the largest proximate contributor to emission reductions, whereas domestic final demand remained the main contributor to emission growth. These findings provide insights into better aligning foreign investment with climate mitigation goals. Domestic enterprises-multinational enterprises production linkages reduced carbon emissions by over thirteen thousand megatons mainly through energy and material sectors, identified using structural path and structural decomposition analyses.