Environmental Regulation, Industrial Structure Upgrading and Technological Innovation: Empirical Data from Guangdong Province in China

Abstract

Environmental regulation has obvious externality on technological innovation. How to protect the environment without exerting negative effects on technological innovation activities carried out by enterprises is an important realistic proposition in economic development. Taking the panel data of 21 cities in Guangdong Province from 2005 to 2018 as the research object, the paper empirically studies the impact of environmental regulation on technological innovation, as well as the moderating effect and threshold effect of the industrial structure upgrading on the relationship between them. The results show that there is an inverted U-shaped effect of environmental regulation on technological innovation, and a moderate intensity of environmental regulation is conducive to promoting the development of technological innovation. The industrial structure upgrading plays a significant negative moderating effect in the inverted U-shaped relationship on the whole, causing the curve of the inverted U-shaped relationship to move to the left. Furthermore, through the threshold regression model, we find that the moderating effect of industrial structure upgrading has significant nonlinear characteristics. The level of upgrading lower than the first threshold or higher than the second threshold is not conducive to the effect of environmental regulation on technological innovation. In the implementation process of environmental regulation, more attention should be paid to promoting the rationalization of industrial structure in combination with industrial policies.