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Environmental regulation, R&D investment, and green technology innovation in China: Based on the PVAR model

Author

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  • Yueting Zhang
  • Huaichao Chen
  • Zhimin He

Abstract

The unreasonable economic development model of human beings has caused the environmental pollution problem to become increasingly serious. In order to achieve a positive relationship and interaction between environmental regulation, research and development (R&D) investment, and green technology innovation, and effectively solve the “strange circle” problem between high-quality economic development and environmental pollution in China and even the world, this paper takes the panel data of industrial enterprises above designated size in Chinese mainland 31 provinces from 2009 to 2019 as a research sample. The comprehensive index of R&D investment and green technology innovation was established by the entropy method, and the panel vector autoregressive (PVAR) model was constructed from the dynamic endogenous perspective, and the dynamic interaction and regional heterogeneity between environmental regulation, R&D investment, and green technology innovation were empirically analyzed by using impulse response function and variance decomposition. We obtain the following findings: (1) Environmental regulation has a two-way interaction relationship with R&D investment and green technology innovation, and R&D investment has a promotion effect on the “green degree” of technological innovation, but its role is still weak and has lagging characteristics. (2) There is significant regional heterogeneity in the dynamic responses of the eastern, central and western parts of China. (3) In the long run, environmental regulation has a “negative crowding out effect” on R&D investment in the central region, and the phenomenon of “central collapse” still exists but will gradually weaken. Environmental regulation has a “positive innovation compensation effect” on green technology innovation. Green technology innovation and R&D investment have an obvious “Pareto improvement” effect on environmental regulation, especially in the eastern region. The conclusions of this study help to clarify the dynamic interaction between environmental regulation, R&D investment, and green technology innovation, further improve environmental regulatory policies and green technology innovation R&D decision-making, and provide an effective way to achieve green and sustainable development in China and other parts of the world.

Suggested Citation

  • Yueting Zhang & Huaichao Chen & Zhimin He, 2022. "Environmental regulation, R&D investment, and green technology innovation in China: Based on the PVAR model," PLOS ONE, Public Library of Science, vol. 17(10), pages 1-21, October.
    • Handle: RePEc:plo:pone00:0275498
    DOI: 10.1371/journal.pone.0275498
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    1. Liuliu Lai & Yanjun Chang, 2023. "Do China’s pilot free trade zones promote green dual-circulation development? Based on the DID model," PLOS ONE, Public Library of Science, vol. 18(3), pages 1-22, March.
    2. Huangfu, Jianhua & Wei, Weixian & Yu, Lei & Li, Guoliang, 2025. "The impact of environmental policy stringency and oil prices on innovation: Evidence from the new energy vehicle industry in China," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 979-996.

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