Do Innovation and Entrepreneurship Support Policies Promote Urban Green Transformation?—The Mediating Role of Fiscal Technology Expenditure

Abstract

This article takes the establishment of two batches of mass entrepreneurship and innovation demonstration bases in 2016 and 2017 as a quasi-natural experiment. It utilizes panel data from 284 cities in China from 2010 to 2021 to construct a multiple time point difference-in-difference (DID) model. This study finds that innovation and entrepreneurship support policies can effectively promote urban green transformation. The robustness of the model is ensured through parallel trend tests, placebo tests, difference-in-difference-in-difference models, PSM-DID, and other methods. A mechanism analysis reveals that fiscal technology expenditure partially mediates the process of innovation and entrepreneurship support policies affecting urban green transformation. A heterogeneity analysis indicates that innovation and entrepreneurship support policies have only a significant positive impact on the green transformation of eastern cities, (sub-)provincial cities, and cities with high green total factor productivity, suggesting that the effectiveness of innovation and entrepreneurship support policies may be influenced by the size of the urban economy. This article provides a theoretical basis and policy recommendations for better leveraging the effects of innovation and entrepreneurship support policies to address the dual challenges of economic and green transformation jointly.