How Does Environmental Law Affect Companies' R&D Capabilities? An Example from Guangdong During 11th Five Year Plan

Abstract

Since reform and opening up, China's economy has grown rapidly, while a heavy environmental price has also been paid. Today under the goal of "dual carbon", it is urgent to promote the transformation and upgrading of enterprises to achieve green development. This paper takes the manufacturing enterprises in Guangdong province as the research sample, and takes the environmental regulation of the "Eleventh Five-Year " policy as the quasi-natural experiment, and empirically explores the impact of environmental regulation on the transformation of enterprises through the PSM-DID method. This work finds that what affect companies R&D expenses significantly are those nonpolicy factors. And the increase of years of company operation and income will promote the investment in innovation of the enterprise. The paper concludes that increasing the input of R&D by executing environmental restriction policy is not reliable, and environmental regulation may require further intervention in firm internal performance to be effective.