Threshold Effect of Two-Way FDI Synergy on Regional Green Technology Innovation under Heterogeneous Environmental Regulation: Evidence from China’s Provincial Panel Data

Abstract

The green technology innovation system is a fundamental method for China to achieve its goals of carbon peak and carbon neutrality. Clarifying the relationship between two-way foreign direct investment (FDI) synergy and regional green technology innovation is key to the green transformation and sustainable development of regional innovation systems. Based on panel data from 30 provinces in China from 2009 to 2020, a threshold-panel-regression technique is used. Command-controlled environmental regulation (CER), market-incentive environmental regulation (MER), and public-participation environmental regulation (PER) are taken as threshold variables, and the threshold effect of two-way FDI synergy on regional green technology innovation under heterogeneous environmental regulation is empirically explored. The results show the following. (i) The effects of two-way FDI synergy on regional green technology innovation exhibit significant threshold characteristics with heterogeneous environmental regulation as a double threshold. (ii) As the threshold values of CER and PER increase, the promoting effect of two-way FDI synergy on regional green technology innovation first increases and then decreases. (iii) As the MER threshold value increases, the promoting effect of two-way FDI synergy on regional green technology innovation continues to increase. (iv) Under the medium-threshold condition of PER, the promoting effect of two-way FDI synergy reaches its greatest value. (v) The intensity of intellectual property protection, the number of regional innovation institutions, and the level of transportation infrastructure all have significant positive effects on regional green technology innovation, and the number of regional innovation institutions exhibits the greatest promoting effect. This study provides new insights into two-way FDI synergy and methods to promote green technology innovation, and these findings can help the government formulate future policies and strategies to promote regional green technology innovation.

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