Urban Spatial Structure and Green Innovation in China

Abstract

The relationship between urban spatial structure, economic activities, and the environment is complex and interdependent, yet there is a paucity of literature that examines green innovation from a macro perspective of the urban development mode. To fill this gap, this study employs panel data from 268 Chinese cities between 2008 and 2018 to investigate how a city’s capacity for green innovation is influenced by its urban spatial structure, specifically in terms of urban compactness. Our results demonstrate a significant inverted U-shaped relationship between the compactness of urban spatial structure and green innovation, which remains robust even when using instrumental variable estimation. We find that an increase in urban compactness promotes green innovation when the compactness index value is less than 4.49 (3.74–4.10 with instrumental variable estimate). However, beyond this threshold, agglomeration diseconomies begin to outweigh agglomeration economies, and a decentralized growth pattern becomes more conducive to green innovation. These findings suggest that indiscriminate deployment of urban polycentric development plans may hinder a city’s green innovation capacity. With the growth of urban population, the importance of urban environmental protection becomes more prominent. Therefore, should we stick with the compact urban development paradigm or transition to polycentric development to achieve sustainable urban growth? Using data from 238 Chinese cities from 2008 to 2018, we discover that adopting a compact spatial structure is more conducive to green innovation when the city population concentration has not yet reached a critical value, and that the latter structure is more effective when cities are overcrowded. Furthermore, we underline that for cities with difficult-to-extend metropolitan limits and excessive agglomeration, increasing institutional regulation might minimize the detrimental consequences of excessive agglomeration on city sustainability.