Foreign Direct Investment and Environmental Pollution: New Evidence from China

Abstract

This paper investigates the relationship between FDI and environmental pollution based on 30 provincial capital cities data from China and exploits the possible mechanisms that cause specific pattern between FDI and environmental pollution. According to panel data model with and without technological progress, the relationship between FDI and sulfur dioxide exhibits inverted Ushaped pattern, yet there is no certain pattern between FDI and PM10 under two circumstances, in the meanwhile, the quadratic relationship between FDI and nitrogen dioxide disappears once incorporating technological progress. This paper further estimates such relationship by utilizing panel threshold model and concludes the impact of FDI on the emission of PM10 exhibits N-shaped pattern rather than usual U-shaped pattern, the relationship between FDI and sulfur dioxide may exist inverted V or U-shaped pattern and there is no any specific relationship between FDI and nitrogen dioxide. Theoretically, production scale effect, technique effect and regulation effect brought by FDI jointly determine the impact of FDI on environmental pollution and latter two effects will relieve the environmental deterioration in the long run.

Foreign direct Investment–CO2 emissions nexus in Middle East and North African countries: Importance of biomass energy consumption

“…Table 5 reflects empirical results, which show that ⍺ , ⍺ , and ⍺ are positive, negative, and positive, respectively, and thereby, imply an N-shaped relationship between FDI and CO2 emissions. These empirical results support the findings of Yan and An (2017). Although some studies consider the positive effect of FDI over the technical effect (Pazienza, 2015), results of the present study show that, in MENA nations, employment of technical advances are insufficient in the short-term correction of CO2…”

“…first turnaround point) and also experience a dip in their pollution levels with ascending level of income (de Bruyn and Opschoor, 1997;Sengupta, 1997). The traditional inverted U-shaped EKC can be explained by considering FDI as a proxy of economic growth, as it indicates the level of economic activity in a nation (Manzoor and Chowdhury, 2017;Yan and An, 2017). The linear association described in the literature suggests that a rise in FDI directly impacts economic growth, whereas in the case of a cubic association, FDI and economic growth have a direct relationship only at extreme levels of FDI (Manzoor and Chowdhury, 2017).…”

The carbon emission and life expectancy nexus: mediating roles of agriculture and foreign direct investment in Nigeria

“…The practical implication of this theory is that carbon emission is positively correlated with FDI. However, extant literature in this research space have discovered conflicting results on these relationships (Esfahani and Naderi, 2017;Yan and An, 2017;Yoon and Heshmati, 2017;Zugravu-Soilita, 2017). Till date, the debate on the correlation between carbon emission and FDI remains contentious.…”

The Impact of Foreign Direct Investment on Environmental Pollution in China: Corruption Matters

“…At the aggregate level, 1% more FDI induced 0.1% more industrial sulfur dioxide emission, i.e., a positive association between FDI and pollution. Assuming that FDI increased pollution through the scale effect but decreased pollution through the technology and regulation effects, Yan and An [ 35 ] found with China’s provincial panel data that FDI had an inverted U-shaped influence on sulfur dioxide emission but an N-shaped influence on nitrogen dioxide emission.…”