The influence of environmental regulation on technological innovation

Abstract

Since the reform and opening up, China's economy has grown rapidly and gradually become the world's second largest economy. However, it is accompanied by the increasingly severe environmental problems caused by the extensive development mode. Therefore, the central and local governments have formulated a series of environmental regulations to restrain pollution behavior. For China in the period of economic transition, the formulation of environmental regulations should be adapted to economic development, and the goal should be to promote green technology innovation and achieve high-quality growth. Based on the data of 31 provinces and cities in China, this paper studies the relationship between environmental regulation and technological innovation. The results show that: (1) appropriate environmental regulation can improve the level of technological innovation, which supports ‘Porter hypothesis’;(2) Environmental regulation is to encourage enterprises to adopt cleaner technologies by increasing the expected punishment level of enterprises, reallocating social resources, and providing green subsidies for high-tech industries and new energy industries, so as to improve the technological innovation level of the whole society. On this basis, some policy suggestions are put forward, such as improving the intensity of environmental regulation appropriately, paying attention to the implementation of regulation measures, and increasing the intensity of financial expenditure on science and technology.