Abstract
Economic development in the “new era” will require green innovation. To encourage the growth of green technology innovation, it has become fashionable to strengthen environmental regulation. However, the impact of environmental regulation on green technology innovation, as well as the role of government subsidies, needs to be examined. Utilizing fixed-effect models and 2SLS models to explore the impact of environmental regulation on green technology innovation in China from 2003 to 2017, this research sought to examine whether environmental regulations impact green technology innovation, as well as the role of government subsidies in the above-mentioned influence path. The findings support the Porter Hypothesis by demonstrating an inverted “U” relationship between environmental regulation and green technology innovation. The impact of environmental regulation on green technology innovation varies by region. To be specific, there is an inverted “U” relationship between environmental regulation and green technology innovation in China’s central and central coast regions. In comparison, the north area, southern coast, and southwest region exhibit a “U” relationship between the two. The relationship is not significant in the Beijing-Tianjin region. Additionally, government subsidies act as an intermediate in this process, positively influencing firms to pursue green technology innovation during the earliest stages of environmental regulation strengthening. However, government subsidies above a certain level are unproductive and should be used appropriately and phased off in due course.
Highlights
After 40 years of reform and opening-up, China’s economy has entered a “new era” of pursuing high-quality growth
Increased regional green technology innovation may result in reduced pollutant emissions and a decrease in the level of environmental regulation
Our article argues that while regional environmental regulation is inextricably linked to provincial environmental regulation, regional environmental regulation cannot have a direct effect on provincial technology innovation
Summary
After 40 years of reform and opening-up, China’s economy has entered a “new era” of pursuing high-quality growth. From 2012 to 2021, CNY 7.07 trillion was spent on science and technology in the national general public budget. This means that the economic development pattern has shifted from extensive growth of scale and speed to intensive growth of quality and efficiency. A high-quality development goal of “innovation, coordination, sustainability, openness, and sharing” was established by the Chinese government in 2017. It calls for the establishment of an economic system that promotes green, low-carbon, and circular development, as well
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