The dynamic association between public environmental demands, government environmental governance, and green technology innovation in China: evidence from panel VAR model

Na Zhang (), Jinqian Deng (), Fayyaz Ahmad (), Muhammad Umar Draz () and Nabila Abid ()
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Na Zhang: Lanzhou University
Jinqian Deng: Lanzhou University
Fayyaz Ahmad: Lanzhou University
Muhammad Umar Draz: Canadore College, Canadore at Stanford
Nabila Abid: University G. D’Annunzio Chieti-Pescara

Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, 2023, vol. 25, issue 9, No 36, 9875 pages

Abstract: Abstract Public demand for environmental protection and environmental governance has a profound impact on enterprises’ innovation behavior. Based on the panel data of 30 provinces in China from 2001 to 2018, this study uses a unit root to co-integration approach and the Panel Data Vector Autoregression model to empirically test the two-way dynamic relationship among green technology innovation, public environmental demands, and government environmental governance. The results show that both public environmental demands and environmental governance stimulate enterprises’ green technology innovation; the estimated coefficient of government environmental governance and public environmental demands is 0.6681 and 0.0337, respectively. The incentive effect of environmental governance was more significant than that of public demands. Public environmental demands and green technology innovation have a bidirectional link, while environmental governance and green technology innovation share a two-way causality; meanwhile, environmental governance and public environmental demands share a unidirectional causal link. This study uses Impulse Response Function and Variance Decomposition to validate the outcomes, which shows that environmental governance’s positive effect is more direct, while the effect of public demand has a time-lag impact, and the relationship among the three main variables is stable after the tenth period. The largest contribution to green technology innovation is environmental governance, with an explanation degree of 22.01%, followed by institutional quality (13.30%), and then public environmental demands (4.8%). These conclusions are not only significant for China to deal with the relationship among the public, government, and enterprises in the process of environmental governance, but also a valuable reference for other countries.

Keywords: Environmental governance; Public environmental demands; Green technology innovation; Panel VAR (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s10668-022-02463-8

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