FDI, economic growth, and carbon emissions of the Chinese steel industry: new evidence from a 3SLS model

Abstract

Determine the main factors affecting carbon emissions of Chinese steel industry is indispensable commitments to achieve the sustainable development of China. Hereby, based on the Stochastic Impacts by Regression on Population, Affluence and Technology (STIPRAT) model, this paper combines the economic growth function, carbon emission production function, and the FDI function of Chinese steel industry, and uses the three-stage least square equation model (3SLS) to analyze the relationship between China's economic growth, carbon emissions in the steel industry and FDI (Foreign Direct Investment) inflows. The results document a complete two-way causal relationship of three variables in the whole country and the western region, while the relationship in the eastern region and the central region is not complete. Moreover, no bidirectional causal relationship between carbon emissions and FDI in the eastern region, while only bidirectional causality between carbon emissions and FDI in the central region. These findings are of great significance for Chinese steel industry to formulate effective emission reduction policies.

The role of OFDI in home-country pollution: insights from LMDI and 3SLS approaches

“…For example, Liu and Chen ( 2020 ) forecasted the outdoor PM 2.5 concentrations in four Chinese cities using a 3SLS hybrid neural network approach. Ren et al ( 2021 ) analyzed the relationship between economic growth, carbon emissions, and foreign direct investment in China by applying the 3SLS-STIRPAT model. 2 Although the specific process is very complicated, the consistency of the estimated results has made the 3SLS structural approach widely used.…”

The Nexus Between Air Pollution and Outward Foreign Direct Investment

“…Using samples from 125 countries, Azam and Raza (2022) find that the IFDI has an insignificant influence on AP in Europe and Latin America. Moreover, Ren et al (2021) find a two-way relationship between IFDI and carbon dioxide (CO 2 ). Yüksel et al (2020) further highlight that carbon emissions have an impeding influence on the IFDI.…”

“…Therefore, existing studies relating to environmental regulations cannot accurately reflect the impact of AP on OFDI . In addition, many studies focus on the relationship between AP and inward foreign direct investment (IFDI) (Ren et al, 2021; Yüksel et al, 2020) while neglecting the direct impact of AP on OFDI . This paper studies the two-way relationship between AP and OFDI in China, which can provide implications for the government to coordinate environmental protection and OFDI and help understand how firms adjust their OFDI decisions according to changes in AP .…”

Nonlinear Effects of Eco-Industrial Parks on Sulfur Dioxide and Carbon Dioxide Emissions—Estimation Based on Nonlinear DID

“…Since the reform and opening up, economic globalization has further accelerated, and China has been the developing country attracting the most foreign investment for many years. FDI has not only bridged the capital gap in China's economic development [40], but it has also brought new management experience and technology through spillover effects [41], which accelerated the regional industrial restructuring and marketization process. However, with the expansion of foreign investment, China's environmental quality is also deteriorating dramatically, with a series of environmental problems, such as air pollution and acid rain, becoming increasingly serious [42].…”