Environmental Green Innovation and Economic Performance of China: Mediating of Governance Quality Index

Abstract The study aims to find the impact of environmental green innovation on the economic performance and also find the mediating role of the governance quality index. Utilizing annual time series data from 1996 to 2020 and find the long term impact through Cointegration analysis. Applied robust analysis method through canonical Cointegration regression (CCR), robust least squares (RLS) and fully modified least squares (FMOLS) to find the reliability of the results. The study evaluates the mediation effect to determine whether the governance quality index partially or fully explains the relationship between the dependent variable GDP per capita and independent variables green technological innovation indicators. Analysis find total effect through direct and indirect effect of green technological innovation on the economic performance after accounting the mediator effect of governance quality index. Findings reveal that the direct relationship between green innovation and economic performance is significantly mediated by governance quality. The results indicate that interventions aimed at improving governance quality could effectively enhance the positive impact of green innovation on economic performance. These findings have important implications for policymakers and stakeholders, suggesting that strengthening governance structures can amplify the benefits of green innovation for sustainable economic growth.