What kind of technological innovation will be promoted by environmental regulation?

Abstract

According to the purpose of technological innovation, it is divided into process innovation and product innovation. Using the panel data of 30 provinces, municipalities, and autonomous regions in China from 2007 to 2016, we verify the impact of environmental regulation on process innovation and product innovation, and use threshold models to find that environmental regulation has threshold effects on process innovation and product innovation. The level of openness (Open) and foreign direct investment (Fdi) are threshold variables. The research results show that there are non-significant positive correlations between process innovation and product innovation in environmental regulation, among which the effect of environmental regulation on process innovation is central, western, and eastern; and the effect of environmental regulation on product innovation is eastern, western and central. Only when the level of openness (Open) is moderate, foreign direct investment (Fdi) is high, and environmental regulation has a role in promoting process innovation, the level of openness (Open) is of an inverted "U" type in process innovation. Only when foreign direct investment (Fdi) is moderate, environmental regulation promotes product innovation, the level of openness (Open) has no threshold effect on product innovation.