Does Governance Quality Mediate the Relationship Between Green Innovation and Economic Performance in China?

Abstrak

Research Originality: This study advances macro-level evidence by testing governance quality as an explicit mediation channel through which green innovation is translated into income gains, rather than treating institutions only as control variables. Research Objectives: It examines the long-run effect of green technological innovation on GDP per capita and tests whether governance quality mediates this relationship after controlling for R&D expenditure, renewable energy, emissions, labor participation, and trade openness. Research Method: Annual data for 1996–2024 are analyzed using a harmonized cointegration-based mediation framework, with FMOLS, CCR, robust least squares, and additional HAC/DOLS robustness checks. Empirical Results: Green technological innovation and R&D expenditure show positive long-run associations with GDP per capita across the main estimators. Governance quality is positively related to GDP per capita and partially mediates the innovation-growth relationship. Renewable energy is generally supportive but less stable, while the carbon indicator reflects continued reliance on carbon-intensive production during the transition. Implications: The findings suggest that stronger regulatory quality, implementation capacity, and institutional coordination can increase the economic returns from green innovation and support more balanced, high-quality growth. JEL Classification: O31, O44, Q55, Q56, C22