Does inter-regional investment by publicly listed companies promote local green total factor productivity? A study of the mediation effects of green patents in China

Inter-regional capital flow is one of the critical factors affecting economic growth and regional inequality. This paper examines the impact of inter-regional investment from publicly listed companies on green total factor productivity (GTFP) in 215 cities and their green innovation mechanism between 2008 and 2018 in China. To address the endogeneity of inter-regional investment and GTFP, we adopted the opening of high-speed rail as the instrumental variable in the form of regression discontinuity design (RDD) and two-stage least squares (2SLS) estimates. Validated by five robustness and validity tests, our empirical results show that inter-regional invest-ment significantly enhanced the local GTFP in the host cities. Moreover, the mechanism analysis shows that green patents had a significant mediating effect between inter-regional investment and local GTFP in the host cities. Specifically, green invention patents have had full mediation effects while the green utility model was not part of the transmission mechanism. Further investigation revealed that the effects of inter-regional investment on local GTFP were completely channeled through three categories of green invention patent: alternative energy production, transportation, and energy conservation, while another three categories of patent (waste manage-ment, agriculture/forestry, administrative, regulatory or design aspects) had partial mediating effects between inter-regional investment and GTFP. The decarbonization of polluting transportation and energy sectors is therefore a cost effective way to facilitate China's goal of carbon neutrality by 2060.