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Pilot free trade zones and low-carbon innovation: Evidence from listed companies in China

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  • Pan, An
  • Cao, Xuekang

Abstract

The impact of pilot free trade zones (PFTZs) on companies' low-carbon innovation is not yet studied. In response, this paper considers the establishment of PFTZs as a quasi-natural experiment, using panel data on China's A-share industrial listed companies for the period 2010–2021 and utilizing the entropy balancing difference-in-differences (EB-DID) model to examine PFTZs' impact on companies' low-carbon innovation. The results show that: (1) PFTZs significantly promote companies' low-carbon innovation in pilot cities through the “promoting R&D effect” and the “environmental governance effect”; (2) Foreign capital positively moderates PFTZs' impact on companies' low-carbon innovation; (3) PFTZs' policy effect is characterized by spatial heterogeneity. The paper thus suggests that the government should improve the construction plans of PFTZs to ensure alignment with low-carbon development goals. Moreover, the government should also provide appropriate subsidies for low-carbon technology R&D to encourage innovation, implement advanced institutional systems to facilitate local companies' low-carbon transition, attract high-quality foreign investments to drive the inflow of innovation elements, and optimize the geographical distribution of PFTZs to maximize the spatial spillover effect.

Suggested Citation

  • Pan, An & Cao, Xuekang, 2024. "Pilot free trade zones and low-carbon innovation: Evidence from listed companies in China," Energy Economics, Elsevier, vol. 136(C).
    • Handle: RePEc:eee:eneeco:v:136:y:2024:i:c:s0140988324004602
    DOI: 10.1016/j.eneco.2024.107752
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