Does air pollution hinder technological innovation in China? A Perspective of Innovation Value Chain

Abstract This study investigates the influencing mechanism and effects of air pollution on technological innovation from the perspective of innovation value chain. It establishes the influencing mechanism model and corresponding mediation model and then empirically explores the influencing effects and paths of air pollution on innovation, using panel data from China’s 31 provinces during the period of 2004-2017. The results show that the increase of air pollution level, respectively measured by sulfur dioxide emissions, smoke and dust emissions and industrial waste gas emissions per capita, significantly hinders technological innovation. Air pollution has significant crowding-out effect on innovation funds, thereby decreasing the innovation output, but has not yet produced significant talent loss effect. In other words, innovation fund input plays a mediating role between air pollution and technological innovation output, but innovation personnel input does not play the same role. Moreover, air pollution has greater negative impacts on invention patent output and utility model patent output than design patent output. With that, decision-makers should ensure that all the factors play positive roles in innovation value chain. Targeted environmental regulation policies and effective measures should be developed to improve air quality. Moreover, decision-makers should also enhance technology market activeness and competition level, improve the environment for technological innovation and commercialization, and optimize the allocation of innovation funds and pollution control funds.