Government science and technology spending and energy efficiency: An inverted U-shaped analysis

Abstract

This paper investigates the relationship between government science and technology spending and urban energy efficiency, using data from 282 prefecture-level cities in China spanning 2013 to 2022. The study is motivated by the need to understand how public investment in science and technology contributes to sustainable urban development and efficient energy use, especially in the context of regional disparities and policy interventions. Empirical analysis reveals an inverted U-shaped relationship between government science and technology spending and energy efficiency, a finding that is robust across various tests. Heterogeneity analysis indicates that this effect is significant in the eastern and central regions of China, but negligible in the western region. Furthermore, in cities with low levels of government intervention, the aforementioned relationship exhibits pronounced nonlinearity, while it becomes insignificant in highly interventionist environments. Mechanism analysis demonstrates that green innovation and digital economic development play mediating roles in this relationship. Spatial spillover effects further reveal that low levels of government science and technology spending siphon energy efficiency from neighboring cities, whereas higher levels induce positive spillovers. These findings underscore the importance of optimizing public investment strategies to enhance energy efficiency and foster sustainable development.