Does the Impact of China’s Outward Foreign Direct Investment on Reverse Green Technology Process Differ across Countries?

Abstract

The reverse technology spillover effect of Outward Foreign Direct Investment (OFDI) has been widely discussed. In the context of pursuing green growth, a few scholars began to study the impact of OFDI on home country green technological progress or green total factor productivity. However, few of these papers have made a thorough analysis of how OFDI affects the home country’s green technological progress, and have not considered the impact of different types of OFDI on green technological progress. This paper extends the basic analysis framework of technological progress to green technological progress, and discusses for the first time the ways for China to invest in developed and developing countries to achieve green technological progress. Specifically, this paper combines the global Malmquist productivity concept with the directional distance function to construct the global Malmquist Luenberger (GML) index to describe green technological progress of China’s provinces, and uses panel data model from 2003 to 2016 to study the impact of China’s investment in different types of countries. The results show that: (1) China’s investment in developed countries can bring reverse green technology spillovers and promote China’s green technology progress. But this is also affected by China’s domestic human capital stock, the increase in human capital stock is conducive to the absorption of green technology. (2) OFDI flows to transition or developing countries have failed to bring about green technological progress, but domestic R&D capital stock can produce a control response. (3) Environmental regulation, import trade and domestic R&D capital stock can bring positive effects on green technology progress, while foreign direct investment, fiscal decentralization and economic growth hinder green technology progress. (4) There is regional heterogeneity in the impact of OFDI with different directions on green technological progress. Because of environmental regulation and economic development, the eastern region of China is easier to obtain reverse green technology progress than the central and western regions in the process of OFDI.

The energy consumption-environmental quality nexus in BRICS countries: the role of outward foreign direct investment

“…By adopting dynamic and static panel models, Zhu and Ye ( 2018 ) examined that OFDI has not significantly improved the Chinese environment. However, Eskeland and Harrison’s ( 1997 ) study analysed that outward FDI helps improve the environmental quality of the host and home countries by encouraging more pollution avoidance effects and green investment.…”

The Energy Consumption-Environmental Quality Nexus in BRICS Countries: The Role of Outward Foreign Direct Investment (OFDI)

“…By adopting dynamic and static panel models, Zhu et al (2018) examined that OFDI has not significantly improved the Chinese environment. However, Eskeland and Harrison (1997) study analysed that Outward FDI helps improve the environmental quality of the host and home countries by encouraging more pollution avoidance effects and green investment.…”

Go for Economic Transformation and Development in China: Financial Development, Higher Education, and Green Technology Evolution

“…From the perspective of a country's openness to the outside world and international trade, Cao and Wang (2017) pointed out that international trade will affect labor capital ratio and research and development (R&D) costs and increasing import trade with developed countries will improve talent innovation ability and promote green technology progress. From the perspective of the spillover effect of foreign direct investment, Zhu and Ye's (2018) empirical study, utilizing a global Malmquist-Luenberger index, found that foreign direct investment in developed countries will significantly advance green technology innovation, although they observed regional heterogeneity in the impact of foreign direct investment. It can be concluded that the driving forces behind green technology progress are diverse.…”