Green pathways: The role of international air connections in corporate green innovation

Technology diffusion across countries plays a crucial role in fostering innovation in emerging economies. This study investigates whether and how air connectivity with more environmentally friendly countries influences green innovation. We construct a continuous measure of firms’ exposure to green countries by integrating detailed data on international flights between Chinese airports and foreign destinations with the Environmental Performance Index of destination countries, along with geocoded information of firms and airports. Our empirical analysis shows that more connections with green countries significantly enhances corporate green innovation, as measured by green patent applications. The findings are robust to alternative specifications and instrumental variable estimations. Furthermore, a cross-country citation analysis provides direct evidence of the knowledge spillover mechanism that increased air access to environmentally friendly countries facilitates the diffusion of green knowledge.