Green Industrial Policies and Innovation Efficiency: New Evidence from Local Practices in China

Enhancing green innovation through industrial policy is a crucial task for local governments aiming to reconcile ecological sustainability with economic development. This study constructs a comprehensive dataset of 17,800 local green industrial policy documents and applies text mining techniques to analyze their structural features. Using Chinese city-level data from 2010 to 2021, we empirically investigate the effect of local green industrial policies on green innovation efficiency (GIE). The results indicate that these policies significantly improve regional GIE. Mechanism analysis reveals that green industrial policies enhance GIE by fostering new quality productive forces and alleviating resource misallocation. Moderation analysis further shows that market integration strengthens the positive effect of green industrial policies on GIE by enhancing policy coordination and reducing regional fragmentation. Heterogeneity analysis demonstrates that the effects of different types of green industrial policies vary across cities: executive policies are more effective in regions with superior resource endowments, higher environmental pressure, and advanced economic development, whereas guiding policies are more influential in smaller cities and non-priority environmental regions. These findings suggest that detailed, precise policies play a critical role in boosting GIE in major cities, while broader, guiding policies better stimulate green innovation in smaller cities. Overall, the study provides practical insights for tailoring policy design to local conditions, addressing structural tensions between ecological priorities and economic growth, and accelerating the modernization process in China. JEL Classification : O31, O38, Q55, R11, H70