Does Environmental Decentralization Improve Regional Green Innovation? Evidence from China

7 Green innovation is critical for sustainable development. The reform of 8 environmental management system plays an important role in improving environmental 9 pollution and technology progress. Working from a heterogeneous perspective, this 10 study investigates the effects of different types of environmental decentralization on 11 regional green innovation using statistical data from 30 provinces in China over the 12 period of 2000–2015. The results show that environmental decentralization (ED) 13 promotes regional green innovation. Furthermore, according to different environmental 14 management of levels and affairs, we divide environmental decentralization into 15 provincial-level environmental decentralization (PED), municipal-level environmental 16 decentralization (MED), and county-level environmental decentralization (CED); 17 environmental administrative decentralization (EAD), environmental monitoring 18 decentralization (EMD), and environmental supervision decentralization (ESD), 19 respectively. There is also evidence suggesting that different types of environmental 20 decentralization have varied effects on regional green innovation. These findings set 21 out in this study are robust when different methods are employed. A further 22 investigation indicates that the effects of different types of environmental 23 decentralization on green innovation apparently differ across Chinese different regions. 24 Some policy recommendations will help policymakers to determine more effective 25 environmental decentralization. 26


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In recent decades, China achieves a miracle of rapid economic growth due to the 31 adoption of reform and opening-up policies Liu and Wang, 2017). 32 After long-term economic growth, China, as the biggest developing country and the imbalance of China's regional economic development, this study divides China into 78 three regions: the eastern, central, and western regions and thereby compares the 79 regional difference of the effect of environmental decentralization on green innovation.

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It is beneficial to precisely put forward the optimal combination of environmental 81 decentralization targeting different regional green innovation.

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The rest of the paper is organized as follows. Section 2 provides the literature review, 83 which reviews the existing research on green innovation and environmental 84 decentralization. Section 3 introduces the evolution and current situation of 85 environmental decentralization in China. Section 4 explains data and estimation 86 methods used in this study. Section 5 presents empirical results and analysis. Section 6 87 summarizes the conclusion and related policy implications. 89 In innovation research, green innovation is an important driving force for regional 90 high-quality economic development by promoting technical progress and transforming 91 regional environments. Green innovation is usually associated with the sustainable 92 development of the ecological environment (Schiederig et al., 2012). Chen et al. (2006) 93 described green innovation as "hardware or software innovation that is related to green 94 products or processes, including the innovation in technologies that are involved in 95 energy-saving, pollution-prevention, waste recycling, green product designs, or 96 corporate environmental management". The most prominent terms used on similar 97 topics to describe this innovation type are 'eco-innovation', 'environmental innovation', 98 and 'sustainable innovation'. Fussler (1996) defined eco-innovations as 'new products 99 and processes, which provide customer and business value but significantly decrease 100 environmental impacts". Oltra and Jean (2009) defined environmental innovation as 101 "innovations that consist of new or modified processes, practices, systems, and products 102 which benefit the environment and so contribute to environmental sustainability".

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Sustainable innovation is defined as innovation that improves sustainability 104 performance, where such performance includes ecological, economic, and social 105 criteria" (Boons et al., 2013). In this paper, we draw on the work of Kunapatarawong         R&D input (R&D) The ratio of R&D expenditures over

Model specification 257
In order to explore the effect of environmental decentralization on green innovation, 258 we establish the fixed effects model: where i , t present the province and year respectively. As the dependent variable,  Table 3 reports the regression results of the national region. In Table 3, the regression 269 coefficient of environmental decentralization is 0.206, which is significant at 10%, 270 indicating that environmental decentralization has a positive significant impact on  Notes: t statistics in parentheses. ***, **, * indicates significant at the level of 1%, 5%, and 10%.  Notes: t statistics in parentheses. ***, **, * indicates significant at the level of 1%, 5%, and 10%.   Notes: t statistics in parentheses. ***, **, * indicates significant at the level of 1%, 5%, and 10%. 318

Robustness tests 319
To verify the robustness of previous analysis results, we also perform some additional 320 robustness tests. First, we employ an alternative measurement of regional green  the impact of environmental decentralization on regional green innovation. We first 331 conduct the Moran's I test for spatial correlation of regional green innovation and 332 environmental decentralization. Table 9 demonstrates the Moran's I test results, which 333 indicates that regional green innovation and environmental decentralization show a 334 strong positive spatial correlation. Then, following the work of Zang and Liu (2020), 335 we use standardized spatial inverse-distance weight matrix (W) and spatial Durbin    green innovation in different regions is different. In the eastern region, we find that 365 regional green innovation is positively correlated with environmental decentralization.

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It is also correlated with provincial-level environmental decentralization and municipal- This study quantitatively investigates the impact of environmental decentralization 403 on regional green innovation in China and has limitations that could be possible future 404 research directions. Firstly, this study discusses the direct effect of environmental 405 decentralization on regional green innovation, but does not consider a more 406 complicated framework to understand environmental decentralization-regional green 407 innovation mechanisms, such as the threshold effect of environmental decentralization 408 and the moderating effect of fiscal decentralization. Secondly, as regional green focuses on the impact of environmental decentralization on regional green innovation, 411 but does not consider the importance of spatial spillovers in the explanation of regional green innovation. Future research should consider using spatial econometric models to 413 investigate both the intra and interregional spatial effects between environmental 414 decentralization and regional green innovation.