Local Government Competition, Environmental Regulation Intensity and Regional Innovation Performance: An Empirical Investigation of Chinese Provinces

Jinqian Deng, Na Zhang, Fayyaz Ahmad and Muhammad Umar Draz
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Jinqian Deng: School of Economics, Lanzhou University, Lanzhou 730000, China
Na Zhang: School of Economics, Lanzhou University, Lanzhou 730000, China
Fayyaz Ahmad: School of Economics, Lanzhou University, Lanzhou 730000, China
Muhammad Umar Draz: Department of Management and Humanities, Universiti Teknologi PETRONAS, 32610 Seri Iskandar, Malaysia

IJERPH, 2019, vol. 16, issue 12, 1-17

Abstract: The aim of this paper is to examine the impact of local government competition and environmental regulation intensity on regional innovation performance and its regional heterogeneity. Based on the theoretical mechanism of the aforementioned variables, this study uses the Chinese provincial panel data from 2001 to 2016. We use the super-efficiency data envelopment analysis (SE-DEA) to evaluate regional innovation performance. To systematically examine the impact of local government competition and environmental regulation intensity on regional innovation performance, we build a panel date model using the feasible generalized least squares (FGLS) method. The results indicate that: the regional innovation performance can be significantly improved through technological spillover; local governments compete for foreign direct investment (FDI) to participate in regional innovative production. Moreover, improvements in environmental regulation intensity enhance regional innovation performance through the innovation compensation effect. Our results show that the local governments tend to choose lower environmental regulation intensity to compete for more FDI, which has an inhibitory effect on regional innovation performance. Furthermore, due to regional differences in factor endowments, economic reforms and economic development levels in Chinese provinces, there exists a significant regional consistency in the impact of local government competition and environmental regulation intensity on regional innovation performance. Therefore, institutional arrangements and incentive constraints must be adopted to enhance regional innovation performance as well as to guide and foster the mechanism of green innovation competition among local governments. At the same time, considering the regional heterogeneity of local government competition and environmental regulation intensity affecting regional innovation performance, policy makers should avoid the “one-size-fits-all” strategy of institutional arrangements.

Keywords: local government competition; environmental regulation intensity; regional innovation performance (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

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