Revisiting the porter hypothesis within the economy-environment-health framework: Empirical analysis from a multidimensional perspective

Abstract

The question of whether environmental regulation fosters technological innovation and green development, as a nuanced extension of the Porter hypothesis, constitutes a focal point in contemporary research. Despite this attention, the literature often omits a multifaceted evaluation framework for green development and fails to consider multiaspectual environmental regulation and technological innovation. This study develops a comprehensive model of green total factor productivity (GTFP), situating the Chinese economy within an economy–environment–health nexus. The extended Crépon–Dugeut–Mairesse model is employed to revisit the “strong”, “weak”, and “narrow” Porter hypotheses. The analysis reveals that formal environmental regulation exerts a crowding-out effect on research and development (R&D), whereas informal environmental regulation exhibits a facilitating effect, corroborating the narrow version of the Porter hypothesis. Both categories of regulation contribute to substantial innovation. Following the incorporation of R&D factors, heterogeneity in the “weak” Porter hypothesis emerges in the Chinese context, contingent upon specific types of environmental regulation and technological innovation. Environmental regulation positively influences GTFP, affirming the “strong” Porter hypothesis, primarily through the vector of technical progress change. A developmental trajectory to enhance GTFP is thus articulated: judicious environmental regulation leads to R&D, which in turn fosters innovation quality, subsequently affecting the technical progress change index and ultimately GTFP. Correspondingly, policy recommendations are delineated across three dimensions: judicious environmental regulation, targeted innovation support, and regional coordination.