Environmental Regulation, Foreign Direct Investment and China's High-Quality Economic Development

Abstract

As China's economy shifts from a rapid development stage to a high-quality development stage, it is important to know how different FDI characteristics affect high-quality economic development. Furthermore, under the constraints of environmental regulations, will these impacts change? The dual-fixed spatial Durbin model and panel data of 30 provinces in inland China from 2005 to 2018 were used for analysis. This study finds that (1) under the constraints of environmental regulations, the scale of FDI, export orientation, and technology spillover capacity have a significant positive impact on China's high-quality economic development, but without the constraints of environmental regulations, only the technological spillover capability of FDI has such a significant positive impact. (2) FDI with strong technology spillover capabilities not only promotes local development but also plays a significant role in promoting high-quality economic development in surrounding areas through spillover effects. (3) Compared with secondary industry, tertiary industry plays a stronger role in promoting the high-quality development of China's economy. (4) The areas with high quality economic development are concentrated in the eastern coastal cities. The outdated economic and scientific research and technology in the central and western regions means that they lack the ability to learn advanced technologies from FDI.