Driving green investment through innovation and regulation: The role of R&D and pollution control in China

Green investment has emerged as a crucial tool for sustainable development, but its determinants across heterogeneous regional contexts remain inadequately understood. This study examines determinants of green investment across Chinese provinces, focusing on R&D intensity, pollution control intensity and innovation capacity. We employed fixed-effects regression and bias-corrected least squares dummy variable (LSDV) dynamic panel estimators to demonstrate that R&D intensity has a significant positive effect on green investment. In contrast, pollution control intensity exhibits negative associations, indicating substitution between conventional pollution control and innovative green technologies. Green investment determinants vary considerably by region, with R&D intensity exhibiting the strongest impacts in Central China and pollution control intensity showing the most pronounced negative effects in the Eastern provinces. These findings contribute to the understanding of green investment determinants and provide valuable insights for policymakers seeking to balance environmental objectives with economic development through targeted regional approaches to R&D promotion and environmental regulation.