Trade openness and urban green innovation: A dual perspective based on financial agglomeration and human capital accumulation

Abstract

A more comprehensive understanding of the impact of trade openness on green innovation can help to advance sustainable development of economic growth and environmental protection simultaneously. Therefore, using panel data from 277 Chinese cities from 2009 to 2022, and based on the dual perspectives of financial agglomeration and human capital accumulation and the moderating role of environmental regulation, this study provides an in depth analysis of the bidirectional impacts of trade openness on the quantity and quality of green innovation in cities from multiple perspectives. The relevant findings are fourfold. (1) Trade openness significantly promotes the quantity and quality of green innovation, and the conclusions remain robust following a series of tests for validity and endogeneity. (2) Heterogeneity analysis demonstrates that the impact of trade openness on overall green innovation is more significant for export-trading cities, inland cities, resource-based cities, and nonenvironmental protection priority cities. (3) Mechanism analysis indicates that trade openness enhances overall urban green innovation by promoting regional financial agglomeration and human capital accumulation. (4) Moderating effect tests demonstrate that environmental regulation positively influences the relationship between trade openness and green innovation. Specifically, the positive impact of trade openness on green innovation is more pronounced in environments with stricter regulations. These results provide valuable insights for promoting China's increased openness to the outside world and advancing global Sustainable Development Goals.