The Mechanism of Driving Green Growth and Decreasing Energy Security Risks by Innovation in China

The role of innovation for economic growth has been proved by studies. However, whether innovation can decrease environmental cost and energy security risks remains to be studied. To explore the theoretical mechanism of driving green economic growth by innovation, we constructed a four-sector endogenous growth model, including the final-goods sector, the intermediate-goods sector, the Research and Development (R&D) sector, and the energy sector. Then we measured the innovation-driven effect of green growth and calculated the green added value of 40 industries in China during 2005-2016. Based on the calculations, we used a threshold regression model to test the mechanism of driving green growth and decreasing energy security risks by innovation. The results showed that: (1) the innovation-driven effect on green growth increased from 0.2729 in 2005 to 0.3446 in 2016. (2) The proportion of green added value in the traditionally added value increased from 79.54% in 2005 to 92.25% in 2016. (3) Innovation had a threshold effect on green growth: the role of innovation in driving green growth weakened in the long term, but not in the short term (4) Innovation also had a threshold effect on energy security risk: after the innovation-driven effect crossed the threshold, innovation decreased energy security risk more significantly.