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Industrial Technology Progress

Does Marketization Promote Chinese Industrial Transformation and Upgrading? An Empirical Study from the Perspective of Green Technological Innovation 

Dong Xu1 , Fu Wensi1 , Zhao Xiaomeng2 , Yang Yali3 

(1. School of Economics, Zhengzhou University of Aeronautics, Zhengzhou 450046, China; 2. School of Economics and Business Administration, Central China Normal University, Wuhan 430079, China; 3. School of Information Management, Zhengzhou University of Aeronautics, Zhengzhou 450046, China)

Abstract: As China's economy enters a phase of market-oriented reform and embarks on a path of modernization, it becomes crucial to recognize the importance of driving industrial trans⁃ formation and upgrading through market-oriented reform and technological innovation. This will greatly contribute to China's high-quality economic development and enhance its comprehen⁃ sive national strength. Concurrently, the escalating strain on resources and the environment has propelled the imperative of embracing greening as a pivotal avenue for industrial transformation and advancement. In this regard, the adoption of green technology innovation holds substantial promise in effectively addressing this predicament. In this context, we endeavor to analyze the impact and mechanism of marketization on the process of Chinese industrial transformation and upgrading, focusing specifically on the lens of green technology innovation. The study begins by elucidating the inherent logical connection between marketization, green technology innovation, industrial transformation and upgrading through a comprehensive analysis of existing literature and deductive reasoning. We use a panel data of 31 provinces in Chinese Mainland from 1997 to 2020, with the help of two-way fixed effects model and panel threshold model, to empirically test the effects of marketization on industrial transformation and upgrading, and to identify the role mechanism played by green technology innovation in this process. The key findings are as follows. ①During the study period, China's marketization level has been increasing, but there are obvious regional differences, with an overall gradient distribution pattern of "East > Cen⁃ tral > West". Also, China's industrial structure is moving towards rationalization and high-end,and the industrial transformation and upgrading among regions shows a convergence trend. ② Marketization plays a crucial role in promoting industrial transformation and upgrading, and its elasticity regarding the rationalization of industrial structure and the advancement of industrial structure is 7.5% and 5.9%, respectively. This conclusion still holds after endogeneity treatment and robustness tests. ③Regional heterogeneity is observed in the effects of marketization on in⁃ dustrial transformation and upgrading. In the eastern and central regions of China, marketoriented reform has been instrumental in facilitating industrial transformation and upgrading. Conversely, in the western region, marketization has not yielded substantial effects on industrial transformation and upgrading. The disparity in the impact of marketization on industrial transfor⁃ mation and upgrading is more pronounced in the eastern region compared to the central region. ④Market-oriented reform has a significant green technological innovation effect, which can em⁃ power industrial transformation and upgrading by promoting green technology innovation. From the perspective of "quantity" and the "quality" of innovation, the contribution of marketization to the quantity of green technology innovation is higher than the quality of green technology innova⁃ tion, which means that the green effect of China's current market-oriented reform is still in a relatively crude stage.⑤Under the influence of green technology innovation, the relationship be⁃ tween marketization and industrial transformation and upgrading exhibits a double-threshold ef⁃ fect. Moreover, as the level of green technology innovation improves, the impact of marketization on industrial transformation and upgrading demonstrates an increasing marginal effect. 

Key words: marketization; industrial transformation and upgrading; green technological inno⁃ vation