Does haze pollution inhibit innovation efficiency in China? The mediating role of human capital and the moderating role of government attention

The problem of low innovation efficiency in developing countries has gained increasing attention, although there is little empirical evidence to examine this issue, especially from a haze pollution perspective. To fill this critical gap, this paper employs a series of empirical methods to investigate the impact of haze pollution on innovation efficiency and takes a panel dataset covering 30 provincial-level regions in China over 2010-2018 as a case study. Results show that: (1) An increase in haze pollution has an inhibitory effect on China's provincial innovation efficiency, whether for the overall, R&D, and commercialization efficiency. (2) Such a negative effect is exacerbated in provinces with low levels of urbanization and financial development, presenting a preference for poor territories. (3) Regarding spatial spillover effects, innovation efficiency in a given province is negatively correlated with haze pollution from neighboring provinces. (4) Regarding mediating factors, haze pollution reduces human capital and subsequently can inhibit innovation efficiency, i.e., the "human capital loss effect". (5) Regarding moderating factors, rather than a "cost following effect", government attention mitigates the inhibiting effect of haze pollution on innovation efficiency through an "innovation compensation effect". In general, policymakers should seek a win-win situation between innovation activities and environmental protection.