1. Introduction
Currently, China is the world’s largest carbon-emitting [
1] and energy-consuming country [
2], and there is an urgent need for China to change its crude development model. China’s economy has grown by leaps and bounds since its reform and opening up. According to public information from the China Bureau of Statistics, China’s GDP grew from RMB 0.46 trillion in 1980 to RMB 98.65 trillion in 2019, an increase of over 200 times, making it the world’s second largest economy. However, what cannot be ignored is that China’s quick economic development has cost the environment dearly. The long-standing crude development model of high input and high emission has led to serious environmental pollution. How to promote green total factor productivity (GTFP) to achieve the transformation of sustainable development by reducing energy consumption and pollution emission is a serious challenge in China [
3].
With the worsening environmental pollution and climate problems, scholars have been prompted to focus on green economic development [
3]. Early studies mainly used the TFP index to measure economic growth, ignoring non-desired outputs [
4,
5], but were unable to accurately assess changes in social welfare as well as economic performance [
6]. Subsequently, GTFP was considered a better indicator to assess the harmonious and sustainable development of the economy and the environment, because it takes into account energy consumption and environmental pollution on the basis of TFP [
7,
8]. Recently, scholars have studied the impact of institutional factors on GTFP, mainly in terms of environmental regulation [
9,
10], industrial policy [
11], tax policy [
12], and foreign policy [
13]. However, the role of intellectual property protection (IPP) has been ignored. Specifically, IPP, as an important governmental institution, would protect knowledge creation [
14,
15], stimulate innovation [
16,
17,
18,
19], and promote TFP [
20]. Therefore, it is likely that the IPP system will have an impact on GTFP. However, there is still a research gap here.
Only a few scholars have explored the environmental effects of IPP. Di Vita (2017) [
21] found that enhancing the level of uniform minimum standards of IPP among World Trade Organization member countries may help reduce air pollution emissions. Hao et al. (2021) [
22] included IPP, trade, foreign direct investment, and outward foreign direct investment in China in a unified analytical framework, using a dynamic threshold regression approach, and showed that trade technology spillovers can reduce carbon emissions only if the regional IPP level exceeds the threshold. On the other hand, Khurshid et al. (2022) [
23] argued that technological innovation for carbon dioxide mitigation mainly focuses on the role of patents, ignoring trademarks. Yu (2022) [
24] used hierarchical analysis to construct an index of green IPP systems, and their empirical study showed that green IPP has a non-linear impact on the ecological environment. Previous studies have focused on a single indicator of particular environmental pollution, ignoring the effect of IPP on GTFP.
China provides a good background for analyzing the impact of IPP on GTFP. As the second largest economy in the world, the high level of IP infringement in China has received widespread attention [
13]. In 2012, the State Intellectual Property Office of China promulgated the Chinese intellectual property model city policy (IPMP). This policy is an important IPP institution in China that aims to strengthen the IPP in China. The main tasks are to formulate and implement urban IPP strategies, strengthen urban IPP management and service capacity building, improve urban IPP systems, increase the strength and depth of IPP policy implementation and coordination with related policies, enhance urban IPP creation capacity, enhance the economic efficiency of urban IPP application, enhance the effectiveness of urban IPP enforcement and protection, and enhance the development of IPP service industry. In this research, we used the IPMP as a quasi-natural experiment to examine the influence of IPP on GTFP and the mechanism of impact based on panel data of 256 Chinese cities from 2005 to 2019.
Compared with existing studies, this study may have the following contributions: First, there are few studies on the impact of IPP institutions on GTFP. Traditional TFP did not consider resource waste and environmental pollution. We use the super-SBM of non-expected output to measure GTFP, which can comprehensively measure the coordinated development of the regional economy and environment compared with single-factor indicators such as carbon emission reduction and air pollution. By examining the impact of the Chinese IPMP, as an exogenous shock, on urban GTFP, we provide new ideas to address the endogeneity problem in research. Our study extends the literature related to the influencing factors of GTFP. Second, the existing literature examined the effect of IPP on the environment and rarely involved the study of the influence mechanism. We propose that IPP can promote urban GTFP in four ways: by fostering technological advancement, boosting human capital, luring foreign direct investment, and modernizing industrial structure. Finally, existing studies have mainly been conducted at the national and provincial levels, ignoring the differences among cities within provinces. We conduct a more detailed analysis at the city level.
The paper is organized as follows:
Section 2 presents the policy background and theoretical hypotheses,
Section 3 presents the research design,
Section 4 presents the empirical results and analysis, and
Section 5 presents the study conclusions and recommendations.
2. Policy Background and Theoretical Hypotheses
2.1. Policy Background
China’s IPP system started late. Initially, China promulgated the Provisional Regulations on the Protection of Invention Rights and Patent Rights, the Provisional Regulations on Trademark Registration, and began an initial exploration of the IPP system. Since its reform and opening up, China is in the process of switching from a planned economy to a market economy. The construction of China’s IPP system also developed rapidly. Subsequently, China became a manufacturing powerhouse amid the great wave of globalization. In 2012, the State Intellectual Property Office of China promulgated the IPMP and announced the first batch of 23 cities selected on 27 April 2012. Until 2020, six batches of pilot cities were identified, and a total of 64 cities were selected. The Chinese Intellectual Property Office will focus on providing support and increasing guidance to the pilot cities in the areas of IPP laws and regulations, IPP strategy formulation, responding to foreign-related IP disputes, patent information construction, and IPP financial support services.
The IPMP not only promotes the selected city’s IPP efforts, but also enhances the innovation level and promotes economic growth. For example, according to the public data of the Changsha city Intellectual Property Office, Changsha city, which was selected as the IPMP city in 2012, has achieved remarkable results in comprehensively promoting IPP. First, Changsha city has made efforts to build a collaborative IPP mechanism by establishing an IP court and an IP crime investigation detachment. As of 2021, Changsha city handled more than 300 patent infringement cases, dealt with 600 cases of counterfeit patents, and recovered RMB 10 billion of economic losses for the city’s enterprises. Secondly, the number of patent applications and patent licenses in Changsha increased 8 times and 3.5 times, respectively, and the investment in R&D increased from RMB 20 billion to more than RMB 100 billion. Finally, the number of high-tech enterprises in Changsha city grew from 922 to 5218, an increase of 4.7 times, and the added value of the high-tech industry grew by more than 10% annually.
2.2. Theoretical Framework
2.2.1. Basic Hypothesis
Based on the above background analysis, we argue that the emphasis of China’s IPMP is to strengthen IPP, which will improve the development of the IPP system in the pilot cities as well as the intensity of IP judicial protection. Furthermore, the stronger IPP system of the pilot city will promote GTFP. First, the development model of the traditional economy, with high-speed economic growth as the main goal, relies heavily on the continuous input of energy, capital, and other factors, and has a sloppy development mode and serious environmental pollution. The improvement of the IPP system will enhance regional innovation and promote energy use efficiency [
25]. Second, for developing countries, the capacity for knowledge creation is limited [
26]. Foreign enterprises will not move their knowledge-intensive activities to regions with a weak IPP system to prevent technology leakage [
27]. Therefore, the stronger IPP system of the pilot city would have a better chance of gaining the favor of foreign enterprises with advanced technologies, thus contributing to the enhancement of urban GTFP. Based on this, the following hypotheses are proposed.
H1. The IPMP can enhance the urban GTFP.
2.2.2. Hypothesis of Mechanism
Much literature has confirmed that technological innovation can promote GTFP [
28,
29]. We argue that the IPMP can enhance GTFP by promoting urban innovation. First, the construction of pilot cities can create a competitive market environment conducive to innovation and stimulate entrepreneurs’ willingness to innovate by optimizing the IPP system and safeguarding innovation outcomes and innovation benefits. Second, innovation activities are characterized by long-term, high investment, and high risk [
30], and enterprises’ innovation activities are often inhibited by financing constraints [
31]. The construction of the IPMP cities can broaden the financing channels of enterprises by establishing financial support measures, such as patent pledge financing and patent insurance, to alleviate the crowding-out effect of financing problems on innovation. Finally, the IPMP can reduce the risk of IP infringement on enterprises and enhance their confidence in disclosing information about R&D projects, thus reducing the information asymmetry between enterprises and investors and directly promoting their innovation behavior [
32]. Based on this, we propose the following hypothesis.
H2. The IPMP can promote urban GTFP through technological innovation.
The IPMP in China helps accelerate the accumulation of human capital, form a talent gathering effect, and promote urban GTFP. First, the IPMP will improve the business environment and the importance of innovative talents in the pilot cities, which will inevitably attract more high-tech enterprises and high-end talents to gather, forming a talent gathering effect and improving the human capital level of the pilot cities. Second, strengthening the development of IP talents is one of the main tasks in the construction of the IPMP pilot cities. Specific indicators include the development of education and training of IP talents, policies and measures for the introduction and cultivation of IP talents, the number of IP talents, and the annual financial investment in the work of IP talents, to enhance the human capital level of the governments of pilot cities. Further, human capital, especially highly skilled human capital, is the primary capital to promote TFP, and a high-quality talent pool is the core competitiveness of enterprises [
33]. Moreover, the level of human capital in a region directly determines the region’s ability to absorb innovative technologies [
34]. Based on this, we propose the following hypothesis.
H3. The IPMP can promote urban GTFP through boosting human capital.
The IPMP attracts foreign direct investment and thus promotes GTFP. Under open conditions, if the host country establishes a complete IPP system, which can not only reduce the additional costs that multinational companies need to invest in the process of entry, investment, and operation due to information asymmetry [
35], but also increase the imitation cost required for advanced technology to be imitated by host country enterprises, thus reducing the possibility of advanced technology being plagiarized the possibility of plagiarism of advanced technology is reduced [
36], and the confidence of foreign direct investment is enhanced. In addition, strengthening IPP can also reduce the negative externalities of innovation results [
37], increase the economic value of innovation results, enhance the profitability of foreign direct investment, and thus encourage foreign investment. Based on this, we propose the following hypothesis.
H4. The IPMP can promote urban GTFP through luring foreign direct investment.
The IPMP promotes GTFP through industrial structure upgrading. Implementing reforms to strengthen IPP in developing countries can cause a reallocation of resources, attract advanced industries, and cause industrial transfer [
38]. On the one hand, strengthening the IPP system can effectively accelerate the flow of innovation resources among industries within a region [
39], enhance the efficiency of resource allocation among industries, and upgrade the industrial structure; on the other hand, strengthening IPP can attract various factors to flow into the region [
40], alleviate the pressure of insufficient resources, and promote industrial structure upgrading. Further, industrial upgrading can not only boost the transition of specified resources to the tertiary and clean industries and reduce environmental pollution [
41], but also facilitate the formation of upstream and downstream industries matching with industry and improve regional production efficiency [
42], which is conducive to enhancing urban GTFP.
H5. The IPMP can Promote Urban GTFP through modernizing industrial structure.
Based on the previous analysis, we plotted the impact mechanism of China’s IPMP on GTFP, as shown in
Figure 1.
5. Conclusions and Policy Implications
What is the impact of enhanced IPP on urban GTFP? The answer has important implications for China, which is working towards a green development transition, and for other developing countries where IPP is weak. Based on the panel data of 256 cities in China from 2005 to 2019, this study considers the IPMP as a quasi-natural experiment and examines the effect and mechanism of the IPMP on the GTFP of the pilot cities using a multi-period DID method. The main findings are as follows: First, the IPMP in China has a significant promotion effect on GTFP. The GTFP significantly increases after the selection of China’s IPMP pilot cities, and this finding passes the parallel trend test and still holds in the robustness tests of replacing the explanatory variables, excluding other related policy interference, excluding provincial capitals and sub-provincial cities, and changing to the PSM-DID method to correct for sample bias with the placebo test. Second, the influence mechanism of IPMP on GTFP mainly includes the industrial upgrading effect, the technological innovation effect, the talent clustering effect, and the foreign investment effect. Third, the heterogeneity analysis shows that compared with non-pilot cities, the pilot cities significantly increase the GTFP in the eastern and central regions; however, the promotion effect on pilot cities in the western region is not obvious. In addition, the IPMP has a significant positive impact only in cities with higher fiscal transparency, and the promotion effect on cities with lower fiscal transparency is not significant.
IPMP is an important part of realizing the construction of a strong IPP country in China, and IPP is an important external institutional guarantee for creating a good market environment, innovation environment, and stimulating green economic development. Examining whether the construction of IPR model cities can promote the development of urban GTFP is of great practical significance for strengthening IPR protection and achieving high-quality development. China’s IPMP is an important current IPR protection policy in China, and it is particularly important to scientifically evaluate the effect of this pilot policy on GTFP.
Therefore, this paper puts forward the following policy recommendations. First, the Chinese government should continue to strengthen IPP policies and expand the scope of the IPMP pilot city. This will not only protect the interests of innovators, but also help promote sustainable development. Second, China’s IPMP has less impact on GTFP in western cities and cities with less financial transparency. Therefore, in the specific IPP program, the Chinese government should consider the condition constraints of western cities and cities with lower financial transparency, and increase support and supervision accordingly to promote the coordinated development of IPP, environment, and economy. Finally, the Chinese government should further strengthen the IPP strengthening strategy to promote industrial structure upgrading, enhance technological innovation, attract talent concentration and foreign investment, and ultimately promote the development of a green economy.