The pain of breathing: how does haze pollution affect urban innovation?

The impact of air pollution on regional innovation: empirical evidence based on 267 cities in China

Based on the spatially correlated effects of air pollution on regional innovation, theoretical hypotheses are proposed, and this paper employs a spatial Durbin model to conduct empirical tests using panel data from 267 Chinese cities from 2003 to 2019, and investigates the mediating effect of human capital. Research has shown that (1) air pollution significantly reduces regional innovation output and has a negative spatial spillover effect significantly in the short term; (2) in the process of regional innovation impacted by air pollution, human capital acts as a mediator role; and (3) analysis of heterogeneity reveals that, from the regional perspective, air pollution has significantly damaged regional innovation in eastern and middle cities, but not significantly influences western cities, and in terms of innovation types, there is a stronger detrimental effect on invention patents exerted by air pollution compared to non-innovation patents. The study's findings provide theoretical and empirical evidence to strengthen environmental governance, enhance regional innovation and promote the coordinated development of regional innovation.

How does the opening of China's high-speed rail affect the spatial mismatch of haze pollution and economic growth?

A better reconciliation of haze pollution and economic growth has become the social consensus in China. The development of China's economy and air quality will be significantly impacted by its efforts to create high-speed rail (HSR). Based on panel data from 265 prefecture-level cities in China from 2003 to 2019, this paper investigates how the opening of HSR affects the spatial mismatch of haze pollution and economic growth by using the spatial mismatch index model, multi-period difference-in-differences (DID) model, and intermediary effect model. We find that the spatial mismatch in China has an overall decreasing trend. And its spatial agglomeration is dominated by low levels. Further empirical analysis shows that HSR opening can effectively restrain the spatial mismatch. Even after some robustness tests and endogenous treatment, the conclusion is still valid. In addition, population density, FDI, and industrial structure are also explicit factors affecting the spatial mismatch. Second, there is significant heterogeneity in the impact. This is reflected in the fact that HSR opening can suppress the spatial mismatch of service-oriented cities and the eastern region, while other cities and regions have no noticeable effect. Third, spatial transfer of haze pollution (STHP) and balanced development of economic growth (BEG) are two important conduction paths for the opening of HSR to affect the spatial mismatch. Specifically, HSR opening can constrain the spatial mismatch by inhibiting STHP and BEG. Based on the above findings, recommendations related to promoting a better harmony between haze pollution and economic growth are proposed.

The role of OFDI in home-country pollution: insights from LMDI and 3SLS approaches

Under the global climate crisis, harnessing investment for sustainable development is a practical and effective measure for international society. Based on the logarithmic mean Divisia index (LMDI) decomposition and three-stage least squares (3SLS) structural approaches, this study explores the home-country pollution reduction effect of Chinese OFDI activities using the city-level panel data from 2007 to 2019. The findings of this study indicate that (1) China has made a remarkable achievement in PM2.5 pollution reduction and governance, especially from the year 2012. (2) The OFDI activities can significantly decrease the home-country PM_2.5 pollution. With every 1% increase in OFDI flows, the overall pollution level will decrease by 0.76%. (3) Compared with the scale mechanism, the technology and composition mechanism effects of OFDI flows are more evident in addressing the home-country PM_2.5 pollution. With several related policy implications, this study may fill the lacuna of how to play the role of OFDI activities in the home country, thus promoting sustainable development in the next stage.

Air pollution and corporate innovation: incentive or resistance? Evidence from regression discontinuity

The potentially serious economic consequences of China's severe air pollution problem cannot be overlooked, especially the impact on corporate innovation, which is a core driver guiding firms towards efficient and high-quality development. However, the existing literature has more often investigated the effect of pollution on corporate innovation from the perspective of environmental regulation, while relatively little research is available directly from the perspective of air pollution. In this study, for better causal identification and endogeneity treatment, we consider the Qin ling Mountains-Huai River heating policy as a quasi-natural experiment and explore for the first time the causal effect of air pollution on Chinese industrial firms' innovation through a geographical regression discontinuity (RD) approach. The results find that air pollution has a significant inhibitory effect on the industrial firms' innovation, especially for green innovation, where the innovation of state-owned enterprises, high pollution, and low monopoly firms are more sensitive to pollution. Specifically, a 1% increase in PM_2.5 emissions leads to a 0.803% reduction in the corporate total innovation, a 0.924% reduction in invention patents, a 0.574% reduction in utility model patents, and a 1.087% reduction in design patents. We have verified the robustness of this core finding through a series of robustness checks including adjustment bandwidth, IV estimation, and placebo test. Further to this, we find that air pollution may negatively affect corporate innovation through three channels: crowding out R&D investment, reducing total factor productivity (TFP), and reducing labor supply and the proportion of highly skilled employees. This study sheds light on the severe losses caused by air pollution on corporate innovation capabilities at the micro-level, deepening the understanding of the economic harm caused by air pollution. This suggests that as firms strive to improve their innovative capacity and competitiveness, they should also be aware of environmental protection and green development; otherwise, unnecessary losses in innovation dynamics will be incurred.

How Regional High-Quality Co-Ordinated Development Influences Green Technology Choices: Evidence from 284 Cities in China

High-quality development (HQD) is a fundamental requirement for current and future macroeconomic regulation in China. This study measured the high-quality co-ordinated development (HQCD) index of 284 cities in China from 2010 to 2019 using the entropy weighted TOPSIS method and coupled co-ordination model, and examined the impact of regional HQCD on enterprises’ green technology choices by combining data from Chinese listed companies. The results show the following: (1) Regional HQCD significantly promotes enterprises’ green technology choices, but does not substantially change the direction of their green technology progress. Specifically, co-ordinated regional economic–ecological system development promotes the enterprises’ technological progress toward green practices. Moreover, co-ordinated urban development has a self-reinforcing effect on the preference for green technology choices. (2) Regional HQCD enhances the screening effect of enterprises on green technology by alleviating financial constraints and increasing the awareness of social responsibility. (3) Regional HQCD has a more pronounced promotional effect on green technologies in the categories of transportation; energy conservation; and administration, regulation, or design. Private enterprises and cities with a high-administrative rank responded to the green technology selection effect of regional HQCD. This study enriches the theory and literature on the influence of government policies on firm behavior, and also provides a reference for the international community.