On the Dynamic Nexus of Economic Growth and Green Innovation in China: New Perspective from a GMM Panel VAR Approach

Motong Wang; An Wang; Danyao Li; Rundi Wang; Xinze Li

doi:10.54254/2754-1169/2025.19676

Research Article

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Published on 3 January 2025

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Wang,M.;Wang,A.;Li,D.;Wang,R.;Li,X. (2025). On the Dynamic Nexus of Economic Growth and Green Innovation in China: New Perspective from a GMM Panel VAR Approach. Advances in Economics, Management and Political Sciences,159,29-38.

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On the Dynamic Nexus of Economic Growth and Green Innovation in China: New Perspective from a GMM Panel VAR Approach

Motong Wang *^,1, An Wang ², Danyao Li ³, Rundi Wang ⁴, Xinze Li ⁵

¹ Chinese Academy of Finance and Development, Central University of Finance and Economics, Beijing, China
² Chinese Academy of Finance and Development, Central University of Finance and Economics, Beijing, China
³ Chinese Academy of Finance and Development, Central University of Finance and Economics, Beijing, China
⁴ Chinese Academy of Finance and Development, Central University of Finance and Economics, Beijing, China
⁵ Chinese Academy of Finance and Development, Central University of Finance and Economics, Beijing, China

* Author to whom correspondence should be addressed.

https://doi.org/10.54254/2754-1169/2025.19676

Abstract

Using data from 1992 to 2021, this paper examines the dynamic relationship between economic growth and green innovation in China by applying a panel Vector Autoregression (VAR) model along with the system-Generalized Method of Moments (GMM) procedure. We break down green innovation into two main components: the number of green invention patents and the number of green utility model patents, allowing for a more detailed analysis of each type’s impact. The findings reveal a significant dynamic interaction between economic growth and green innovation. Specifically, economic development demonstrates a strong, positive effect on green innovation, suggesting that as the economy grows, there is increased support for eco-friendly innovations. However, the results also indicate that green innovation exerts a negative effect on economic development, potentially due to the initial costs and shifts in resources required for sustainable initiatives. This complex interplay sheds light on the challenges and opportunities for sustainable growth in China.

Keywords

Economic growth, Green innovation, Chinese provinces, GMM panel VAR

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About volume

Volume title: Proceedings of the 4th International Conference on Business and Policy Studies

Conference website: https://2025.confbps.org/

ISBN：978-1-83558-879-6(Print) / 978-1-83558-880-2(Online)

Conference date: 20 February 2025

Editor：Canh Thien Dang

Series: Advances in Economics, Management and Political Sciences

Volume number: Vol.159

ISSN：2754-1169(Print) / 2754-1177(Online)

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