Environmental Regulation, Green Innovation, and Industrial Green Development: An Empirical Analysis Based on the Spatial Durbin Model

TLDR

Environmental regulation and green innovation are key drivers of industrial green transition, yet few empirical studies have examined their impact on green development, and regional industrial green development is conceptualized as a dynamic system comprising state and process subsystems. The study examines how environmental regulation and green innovation affect industrial green development in China. Using provincial panel data from 2007–2015 and a spatial Durbin model, the authors analyze the roles of administrative, market‑based, and public participation regulation and green product and craft innovation. The results show a fluctuating trend in China’s industrial green development, classify provinces into four categories, reveal positive spatial correlation, and indicate that environmental regulation types and green innovation have differing regional impacts, with market‑based regulation promoting green craft innovation and green product innovation only having a promotional effect when regulation constraints are absent.

Abstract

Environmental regulation and green innovation are two main fulcrums in the realization of green transition of industrial growth. However, few studies have done an empirical analysis of the impact of environmental regulation and green innovation on green development. Based on the theory of systematic interduality, regional industrial green development is regarded as a dynamic system composed of two subsystems: the state and the process subsystem. Using provincial industrial panel data from 2007–2015 and the spatial Durbin model under the unified analysis framework, this paper examines the role and mechanism of environmental regulation (divided into administrative environmental regulation, market-based environmental regulation, and public participation environmental regulation) in the impact of green innovation (divided into green product innovation and green craft innovation) on industrial green development. The results indicate a sharp fluctuating trend in China’s overall industrial green development performance, and that China’s 30 provinces can be divided into four categories, based on the development levels of two subsystems of industrial green development. There is a clear positive spatial correlation between the industrial green development performance in different provinces. Considering the impact of environmental regulation on industrial green development performance, different types of environmental regulation have different regional influences. Considering the impact of green innovation on industrial green development performance, in the absence of environmental regulation constraints, green product innovation shows a certain promotional role, and green craft innovation has a significant inhibitory effect. However, under environmental regulation constraints, market-based environmental regulation through the encouragement of green craft innovation rather than green product innovation achieves a positive impact on industrial green development.