Unveiling the impact of Belt and Road Initiative on green innovation: empirical evidence from Chinese manufacturing enterprises.

Building a green silk road is an important practice in implementing the UN 2030 sustainable development goals. However, several countries taking part in the Belt and Road Initiative (BRI) feature challenging geographic circumstances and delicate ecological environments, which give rise to significant ecological and environmental protection challenges. Considering that green innovation is closely related to sustainable development, this study uses the BRI as a quasi-natural experiment and incorporates data from Chinese A-share listed manufacturing firms from 2008 to 2019 to assess the effect of investments in BRI countries on green innovation. The empirical findings show that the BRI significantly increases the green innovation of enterprises that are involved in foreign investments by alleviating financing constraints. This is accomplished through measures such as government subsidy incentives and overseas income spillover, as well as by enhancing productivity through optimized resource allocation and reverse technology spillover. Notably, the green innovation effect of the BRI is particularly significant in driving green innovation among enterprises with low pollution levels and those in technology-intensive industries. Furthermore, investment in BRI countries in closer proximity to China's institutional framework and with lower levels of economic development can take advantage of a similar innovation environment and gradient industrial transfer advantages, respectively, thus contributing to the improvement of advanced green innovation. Overall, this analysis sheds light on the beneficial effects of BRI investments on green innovation and offers strong empirical support and insightful policy recommendations for China's pursuit of a green Belt and Road.