The Effects Of Environmental Regulation On Technical Innovation In Developing Countries

Governments around the world have strengthened environmental regulation since the 1970s. Then the effects of environmental regulation on enterprises’technical innovation and economic performance have attracted extensive attention of scholars. Under the traditional research framework of new classical economics, most of scholars think that environmental regulation will have a negative impact on technology innovation by increasing production costs. In the early 1990 s, Porter (1991) put forward "Porter Hypothesis" which mean that reasonable environmental regulation in the long run can stimulate the enterprises to carry out technological innovation and produce innovation compensation. Namely, the implementation of the environmental regulation policy can promote enterprise innovation under the condition of the specific time, strength and select reasonable regulation tools. After the Porter Hypothesis being raised, scholars have taken a wide range of test and verify for the theory. But these researches mainly focused on developed countries, few articles are about the effects of environmental regulation on technology innovation in developing countries.On the basis of summarizing the relevant literature at home and abroad, this paper analyzes the incentive and extrusive effects of environmental regulation on technical innovation, and brings foreign direct investment and export into the analysis framework to investigate the indirect impact of environmental regulation on innovation. Based on this, this article adopts the panel data of 20 developing countries see to test porter hypothesis, and analyses the lagged and threshold effects of environmental regulation on technical innovation. Regression results show that:in the current, environmental regulation mainly has extrusion effects, innovation effects in lagged periods are emerging and growing. Meanwhile environmental regulation has threshold effects on technological innovation. Regulation is not conducive to innovation in the low level. It will promote enterprise innovation when regulation strength crosses certain threshold. Most developing countries’regulation level is low and innovation effects of regulation are not significant. Then this article examines the innovation effects of different environmental regulation tools with regional panel data in China. Results show that market-oriented environmental regulation can expand business innovation space and motivate enterprise innovation more effectively. Command and control environmental regulation has weak innovation promoting effect for reducing the choices for enterprises. Finally, on this basis of summarizing the research conclusion, this article put forward relevant policy suggestions.