Will China's R&D investment improve green innovation performance? An empirical study

In 2020, China's R&D investment reached 2442.6 billion RMB, and it ranks second in the world, but the performance of green innovation has not proportionately improved. The question of how to promote the improvement of green innovation performance is particularly important in order to mitigate future environmental problems and issues due to rapid development of China's economy. While past research has examined the relationship between R&D investment and green innovation, they have not explicitly considered the effect of regional technological innovation level on this relationship. Hence, we fill this gap by exploring the relationship between R&D investment and green innovation performance using data from various regions in China from 2015 to 2019, under the effect of a threshold variable, namely, technological innovation. We explore the impact of economic development level, environmental regulation level, foreign direct investment, and science and technology in fiscal expenditures on green innovation performance. The empirical results show that when the regional technological innovation level is used as the threshold variable, the R&D investment has a significant double-threshold effect with the lagging three-phase green innovation performance. When the technological innovation level is low (< 0.1082), R&D investment has a negative impact on green innovation performance. Moreover, when the technological innovation level is high (>0.5837), the impact of regional R&D investment on green innovation performance is sub-optimal. Consequently, the range of [0.1082 to 0.5837] is the best range for the positive impact of R&D investment on green innovation performance. Furthermore, among China's 30 provinces and cities, 24% (mostly areas located in the southwest and northeast of China) have the technological innovation level in the optimal range. Our results help explain the current status of China's R&D investment and green innovation development, and provide a theoretical basis for the formulation of government innovation investment policies.