Previous studies have found that reverse technology spillover effects can promote industrial technology modernization in developing countries. However, it is still unknown whether reverse technology spillover effects can improve green innovation efficiency in developing countries. In particular, institutional uncertainties characteristic of transition economies have a significant impact on industrial modernization. Therefore, researching the impact of the institutional environment on the relationship between reverse technology spillover effects and green innovation efficiency is of great significance. In this paper, we use data from G20 countries as well as China’s foreign direct investment (FDI) data to measure the effects of reverse technology spillovers and adopt the threshold effect model to explore the relationship between reverse technology spillover effects and green innovation efficiency as well as the influence of the institutional environment on this relationship, based on China’s provincial panel data from 2003 to 2015. The empirical results show that the reverse technology spillover effects can effectively improve green innovation efficiency. There is a threshold for the influence of the institutional environment on the relationship between reverse technology spillover effects and green innovation efficiency. When the institutional development level surpasses the threshold value, an acceleration effect is generated. In addition, we find that the legal system is the key bottleneck in terms of improving green innovation efficiency. How to improve and perfect the path of institutional construction in China and how to enable institutions to gain threshold speed-up effects have become the major problems the Chinese government faces in institutional construction. The research results of this paper offer a reference to developing countries in regard to improving their institutions and enhancing their green innovation efficiency.
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