How Functional Industrial Policy Promote the Green Innovation?—Empirical Evidence from Manufacting Development Strategy
Achieving high-quality economic growth is attainable only through green development.As China embarks on a comprehensive journey to build a modem socialist society,it faces increasing constraints on resources and environmental challenges,including significant pollution issues.The manufacturing sector,as a core component of the national economy,must urgently transform and adopt green development practices.At the heart of green development lies green innovation,which is essential for sustainable growth.Despite existing literature underscoring various factors influencing green innovation,few studies have examined this concept through the lens of functional industrial policies.Additionally,limited attention has been given to the impact of China's manufacturing development strategy,particularly the first ten-year action plan,on green innovation.This study utilizes data from Chinese cities,alongside records from Shanghai and Shenzhen A-share listed companies,covering the years 2010 to 2020.By employing the difference-in-difference method,this paper systematically investigates the impact and mechanisms of the manufacturing development strategy on corporate green innovation and the role of government governance effectiveness.Findings indicate that the manufacturing development strategy has significantly fostered both the"quantity"and"quality"of corporate green innovation.This positive impact is achieved through both constraint mechanisms,such as environmental regulation and green credit,and incentive mechanisms,including governmental support for science and technology and protection of environmental rights.Enhanced government governance efficiency has notably strengthened the strategy's implementation,particularly in cities with advanced governance capabilities,which exhibit better policy outcomes.Furthermore,the efficiency of government governance bolsters the green credit,technological support,and environmental rights protection components of the strategy,though it does not substantially improve the constraint of environmental regulation.Heterogeneity analysis suggests that the strategy's effects are more pronounced in highly industrialized,non-resource-based cities that prioritize environmental goals and fall within"two control areas."This paper contributes to the field in several key ways:(1)It broadens the scope of industrial policy and green innovation research by examining the effects of the manufacturing development strategy-a functional industrial policy—on green innovation within the framework of government-market relations.It also assesses the synergistic role of government governance effectiveness.(2)Within the incentive-constraint mechanism paradigm,this study delves into the internal mechanisms through which the manufacturing development strategy influences green innovation in manufacturing,examining whether government governance effectiveness can enhance these mechanisms.This analysis deepens our understanding of the internal dynamics governing the impact of functional industrial policy on green innovation.(3)Finally,it investigates the heterogeneous effects of the manufacturing development strategy on green innovation across cities with distinct characteristics,enriching the research on industrial policy and green innovation and providing clearer policy implications.This paper underscores the critical role of the manufacturing development strategy,a functional industrial policy,in advancing green innovation among enterprises.The findings offer valuable insights for shaping and implementing effective functional industrial policies aimed at fostering green innovation in key sectors.
industrial policymanufacturing development strategygreen innovationincentive and constraint mechanismfactor resource allocationgovernment governance effectiveness
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