IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v16y2024i11p4385-d1399545.html
   My bibliography  Save this article

Fiscal Decentralization, Environmental Regulation, and Green Technological Innovation: Evidence from China

Author

Listed:
  • Changyun Zhou

    (School of Accounting, Southwestern University of Finance and Economics, Chengdu 611130, China)

  • Junxi Zhu

    (School of Finance, Southwestern University of Finance and Economics, Chengdu 611130, China)

  • Zhuo Chen

    (Chengdu Airport Xingcheng Investment Group Co., Ltd., Chengdu 611130, China)

Abstract

To achieve carbon peaking and neutrality, optimizing power allocation and fiscal responsibilities between China's central and local authorities is essential for balancing environmental and economic goals. This study employs fixed-effects panel regression and a threshold model to examine the relationships between fiscal decentralization, environmental regulations, and green technological innovation in 271 prefecture-level cities from 2007 to 2019. The results reveal that environmental regulations significantly advance green innovation. Fiscal decentralization modulates the impact of these regulations on green innovation, with regional variations. In central and western areas, fiscal decentralization inhibits the regulatory effects, whereas in the eastern region, it promotes them. Moreover, fiscal decentralization exhibits a threshold effect: below a certain threshold, it hinders regulatory impact, but beyond that threshold, it enhances it. These findings offer valuable insights for policy decisions and strategies to foster green innovation, providing a theoretical and empirical foundation for policymakers involved in environmental and fiscal planning.

Suggested Citation

  • Changyun Zhou & Junxi Zhu & Zhuo Chen, 2024. "Fiscal Decentralization, Environmental Regulation, and Green Technological Innovation: Evidence from China," Sustainability, MDPI, vol. 16(11), pages 1-17, May.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:11:p:4385-:d:1399545
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/16/11/4385/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/16/11/4385/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bronwyn Hall & Alessandro Maffioli, 2008. "Evaluating the impact of technology development funds in emerging economies: evidence from Latin America," The European Journal of Development Research, Taylor and Francis Journals, vol. 20(2), pages 172-198.
    2. Huang, Zhehao & Liao, Gaoke & Li, Zhenghui, 2019. "Loaning scale and government subsidy for promoting green innovation," Technological Forecasting and Social Change, Elsevier, vol. 144(C), pages 148-156.
    3. Shufen Guo & Ludi Wen & Yanrui Wu & Xiaohang Yue & Guilian Fan, 2020. "Fiscal Decentralization and Local Environmental Pollution in China," IJERPH, MDPI, vol. 17(22), pages 1-17, November.
    4. Xu Dong & Wensi Fu & Yali Yang & Chenguang Liu & Guizhi Xue, 2022. "Study on the Evaluation of Green Technology Innovation Efficiency and Its Influencing Factors in the Central Plains City Cluster of China," Sustainability, MDPI, vol. 14(17), pages 1-24, September.
    5. Yao Xiao & Dandan Ma & Yutai Cheng & Li Wang, 2020. "Effect of Labor Cost and Industrial Structure on the Development Mode Transformation of China’s Industrial Economy," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(8), pages 1677-1690, June.
    6. Bronwyn Hall & Alessandro Maffioli, 2008. "Evaluating the impact of technology development funds in emerging economies: evidence from Latin America," The European Journal of Development Research, Taylor and Francis Journals, vol. 20(2), pages 172-198.
    7. Pei Wang & Cong Dong & Nan Chen & Ming Qi & Shucheng Yang & Amuji Bridget Nnenna & Wenxin Li, 2021. "Environmental Regulation, Government Subsidies, and Green Technology Innovation—A Provincial Panel Data Analysis from China," IJERPH, MDPI, vol. 18(22), pages 1-19, November.
    8. Giorgio Petroni & Barbara Bigliardi & Francesco Galati, 2019. "Rethinking the Porter Hypothesis: The Underappreciated Importance of Value Appropriation and Pollution Intensity," Review of Policy Research, Policy Studies Organization, vol. 36(1), pages 121-140, January.
    9. YuBiao Hao & XueCheng Zhang, 2023. "The impact of environmental regulation on urban green output efficiency: evidence from China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(6), pages 5717-5735, June.
    10. Lv, Chengchao & Shao, Changhua & Lee, Chien-Chiang, 2021. "Green technology innovation and financial development: Do environmental regulation and innovation output matter?," Energy Economics, Elsevier, vol. 98(C).
    11. Yulan Lv & Yumeng Pang & Buhari Doğan, 2022. "The role of Chinese fiscal decentralization in the governance of carbon emissions: perspectives from spatial effects decomposition and its heterogeneity," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 68(3), pages 635-668, June.
    12. Chenggang Li & Jun Wan & Zhenci Xu & Tao Lin, 2021. "Impacts of Green Innovation, Institutional Constraints and Their Interactions on High-Quality Economic Development across China," Sustainability, MDPI, vol. 13(9), pages 1-19, May.
    13. Hu, Guoqiang & Wang, Xiaoqi & Wang, Yu, 2021. "Can the green credit policy stimulate green innovation in heavily polluting enterprises? Evidence from a quasi-natural experiment in China," Energy Economics, Elsevier, vol. 98(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Magdalena Wróbel-Jędrzejewska & Ewelina Włodarczyk & Łukasz Przybysz, 2024. "Analysis of Greenhouse Gas Emissions of a Mill According to the Greenhouse Gas Protocol," Sustainability, MDPI, vol. 16(24), pages 1-15, December.
    2. Shanqing Liu & Jiacheng Qian & Huwei Wen & Ying Wang, 2025. "The Impact of Green Finance Pilot Cities on Enterprises’ Green Innovation Performance: An Empirical Study in China," Sustainability, MDPI, vol. 17(3), pages 1-21, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ma, Yechi & Sha, Yezhou & Wang, Zilong & Zhang, Wenjing, 2023. "The effect of the policy mix of green credit and government subsidy on environmental innovation," Energy Economics, Elsevier, vol. 118(C).
    2. Qi, Xiulin & Wu, Zhifang & Xu, Jinqing & Shan, Biaoan, 2023. "Environmental justice and green innovation: A quasi-natural experiment based on the establishment of environmental courts in China," Ecological Economics, Elsevier, vol. 205(C).
    3. Xijia Huang & Yiting Guo & Yuming Lin & Liping Liu & Kai Yan, 2022. "Green Loans and Green Innovations: Evidence from China’s Equator Principles Banks," Sustainability, MDPI, vol. 14(20), pages 1-20, October.
    4. Hu, Hui & Qi, Shaozhou & Chen, Yuanzhi, 2023. "Using green technology for a better tomorrow: How enterprises and government utilize the carbon trading system and incentive policies," China Economic Review, Elsevier, vol. 78(C).
    5. Tulio Cravo & Caio Piza, 2016. "The Impact of Business Support Services for Small and Medium Enterprises on Firm Performance in Low -and Middle- Income Countries: A Meta-Analysis," IDB Publications (Working Papers) 94938, Inter-American Development Bank.
    6. Lukasz Konopielko & Lukasz Sykala & Krzysztof Wozniak & Dmytro Verbovyy, 2021. "Suburbanization in the Context of R&D Projects Fund Allocation," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 790-805.
    7. Frank, Alejandro Germán & Gerstlberger, Wolfgang & Paslauski, Carolline Amaral & Lerman, Laura Visintainer & Ayala, Néstor Fabián, 2018. "The contribution of innovation policy criteria to the development of local renewable energy systems," Energy Policy, Elsevier, vol. 115(C), pages 353-365.
    8. Junguo Shi & Bert M. Sadowski & Xinru Zeng & Shanshan Dou & Jie Xiong & Qiuya Song & Sihan Li, 2023. "Picking winners in strategic emerging industries using government subsidies in China: the role of market power," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 10(1), pages 1-8, December.
    9. Ugur, Mehmet & Trushin, Eshref, 2018. "Asymmetric information and heterogeneous effects of R&D subsidies: evidence on R&D investment and employment of R&D personel," Greenwich Papers in Political Economy 21943, University of Greenwich, Greenwich Political Economy Research Centre.
    10. Hall, Bronwyn H. & Lerner, Josh, 2010. "The Financing of R&D and Innovation," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 609-639, Elsevier.
    11. Stjepan Srhoj & Michael Lapinski & Janette Walde, 2019. "Size matters? Impact evaluation of business development grants on SME performance," Working Papers 2019-14, Faculty of Economics and Statistics, Universität Innsbruck.
    12. Wadho, Waqar & Chaudhry, Azam, 2020. "Innovation Strategies and Productivity Growth in Developing Countries: Evidence from Pakistan," GLO Discussion Paper Series 466, Global Labor Organization (GLO).
    13. Czarnitzki, Dirk & Lopes-Bento, Cindy, 2013. "Value for money? New microeconometric evidence on public R&D grants in Flanders," Research Policy, Elsevier, vol. 42(1), pages 76-89.
    14. Tian, Jinfang & Sun, Siyang & Cao, Wei & Bu, Di & Xue, Rui, 2024. "Make every dollar count: The impact of green credit regulation on corporate green investment efficiency," Energy Economics, Elsevier, vol. 130(C).
    15. Antonioli,Davide & Marzucchi,Alberto & Montresor,Sandro, 2012. "Regional innovation policy and innovative behaviours. A propensity score matching evaluation," INGENIO (CSIC-UPV) Working Paper Series 201205, INGENIO (CSIC-UPV).
    16. Lan, Minghui & Zhang, Guangli & Yan, Wei & Qi, Fen & Qin, Lihua, 2024. "Greening through courts:Environmental law enforcement and corporate green innovation," Economic Analysis and Policy, Elsevier, vol. 83(C), pages 223-242.
    17. Ugur, Mehmet & Trushin, Eshref & Solomon, Edna, 2015. "UK and EU subsidies and private R&D investment: Is there input additionality?," MPRA Paper 68009, University Library of Munich, Germany, revised 16 Nov 2015.
    18. Pan, Xia & Cheng, Wenyin & Gao, Yuning, 2022. "The impact of privatization of state-owned enterprises on innovation in China: A tale of privatization degree," Technovation, Elsevier, vol. 118(C).
    19. Wadho, Waqar & Chaudhry, Azam, 2022. "Innovation strategies and productivity growth in developing countries: Firm-level evidence from Pakistani manufacturers," Journal of Asian Economics, Elsevier, vol. 81(C).
    20. Czarnitzki, Dirk & Hanel, Petr & Rosa, Julio Miguel, 2011. "Evaluating the impact of R&D tax credits on innovation: A microeconometric study on Canadian firms," Research Policy, Elsevier, vol. 40(2), pages 217-229, March.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:16:y:2024:i:11:p:4385-:d:1399545. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.