How do heterogeneous R&D investments affect China's green productivity: Revisiting the Porter hypothesis

Currently, China's environmental pollution control investment and R&D investment have increased at a remarkable speed, exceeding the GDP growth rate. Against this background, determining the impact of different orientations of R&D investment on green total-factor productivity (GTFP) is essential for overcoming the dual dilemma of resource depletion and environmental degradation. By applying the perpetual inventory method (PIM), meta-frontier DEA method and mediation effect test methods, this paper empirically tests the effects and mechanisms of environmentally induced R&D (ER&D) and traditional R&D (TR&D) on promoting GTFP during 2004–2019 in China at the provincial level. The results show that (1) ER&D investment has significantly promoted the growth of GTFP, while TR&D's promoting effects on GTFP are not significant; (2) ER&D promotes the growth of GTFP through the three channels of emission reduction, clean energy consumption, and green technology progress; and (3) from the perspective of regional heterogeneity, ER&D's promoting effects on GTFP in the eastern provinces are higher than the central and western provinces, and the promoting effects in the northern provinces are higher than in the southern provinces. From the perspective of pollution degree heterogeneity, ER&D's promotion of GTFP shows an inverted U-shaped characteristic as the pollution level increases. This means that, in the process of China's environmental governance, it is necessary to increase ER&D investment and guide green innovation to serve pollution control to achieve sustainable and high-quality economic development. [Display omitted] •Environmentally induced R&D (ER&D) investment and traditional R&D (TR&D) investment are distinguished by the “structure-behaviour-performance” model.•The capital stock of ER&D and TR&D is estimated using the perpetual inventory method.•The GTFP of provinces in China is measured by the meta-frontier DEA method and the direction-distance function.•The effect and mechanism of ER&D on promoting GTFP was empirically examined.