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

Jawad Khan; Lin  Ying; Kashif Raza Shah; Alweena Hasan

doi:10.15408/etk.v25i1.46766

Authors

Jawad Khan School of Economics and Finance, Xi'an Jiaotong University https://orcid.org/0000-0001-8961-7776
Lin Ying Faculty of School of Economics and Finance, Xi'an Jiaotong University
Kashif Raza Shah School of Economics and Finance, Xi'an Jiaotong University
Alweena Hasan Department of Economics, Institute of Management Sciences

DOI:

https://doi.org/10.15408/etk.v25i1.46766

Keywords:

eco-innovation, institutional mediation, sustainable growth, renewable transition, cointegration analysis

Abstract

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

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Author Biographies

Jawad Khan, School of Economics and Finance, Xi'an Jiaotong University

School of Economics and Finance, Xi'an Jiaotong University China
Lin Ying, Faculty of School of Economics and Finance, Xi'an Jiaotong University

Faculty of School of Economics and Finance, Xi'an Jiaotong University China 710049

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