The multi-directional variation of results among environmental regulation, resource utilization, and Research and Development (R&D) investments continue to gain more popularity but few studies have examined the nexus among these variables in an open economy. To analyze the individual and combined effects of environmental regulation and resource utilization on industrial R&D investments, a panel data of 30 provinces in China from 2008 to 2018 was used. We also examined the mechanism underlying the magnitude of pollution inducement on R&D investment. The results show that environmental regulation significantly and positively promotes R&D investment while resource utilization has an inverse effect. Environmental regulation does not interfere with efficiency and neither does the quest for efficiency in resource utilization weaken the impact of environmental regulation on R&D investment. Only a few provinces are within the rising stages of the inverted n-shaped curve indicating environmental regulation level is still low. Even though there are tighter laws, government needs to continue to put in more stringent environmental policies towards achieving sustainable development.
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