Downstream regulation, upstream innovation: Effect of environmental regulation on firms’ green innovation under a zero-growth strategy for fertilizer and pesticide use

Description

While a large literature examines how directly regulated polluters respond to environmental policies, less is known about the innovation effects on upstream suppliers when a regulation restricts the use of their products downstream. This study explores that question by examining the impact of China's 2015 Zero-Growth Strategy for fertilizer and pesticide use on upstream firms' green innovation. Our results show that the strategy significantly increased the share of green patent applications by 5.97%; rather than expanding overall investment, it promoted innovation by encouraging enterprises to optimize their innovation focus and reallocate existing R&D resources toward green technology innovation. The innovation effect was most evident for agricultural green patents, particularly those related to fertilizers and pesticides. The green technology innovation stimulated by the zero-growth strategy was both predominantly substantive and stronger among non-state-owned enterprises. These findings highlight the role of zero-growth strategy in enhancing green technology innovation and offer insights for other developing economies.

Institutions

• Huazhong Agriculture University

  Hubei, Wuhan
• Huazhong University of Science and Technology

  Hubei, Wuhan
• Lanzhou University

  Gansu, Lanzhou
• Yunnan Minzu University

  Yunnan, Kunming

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