Revisiting the Green Growth Effect of Foreign Direct Investment from the Perspective of Environmental Regulation: Evidence from China

Abstract

The inflow of foreign direct investment (FDI) has both advanced China’s economic development process and influenced the ecological quality of China’s regions. Under the deepening of economic globalization and the continuous deterioration in environmental quality, the correlation mechanism between foreign direct investment, environmental regulation, and economic growth is becoming increasingly complex. Therefore, based on the slacks-based measure (SBM) model and the Global Malmquist-Luenberger (GML) index, this study measured the level of green economic growth using data from 30 provinces and cities from 2004–2019 and constructed a panel fixed-effect regression model to study the effect of foreign direct investment on green economic growth in China. The study found that foreign direct investment significantly promoted green economic growth in China, foreign direct investment promoted green economic growth through independent innovation and inhibited green economic growth through imitation innovation, and environmental regulation moderated the impact of foreign direct investment on green economic growth. This paper incorporated foreign direct investment, heterogeneous technological innovation, green economic growth, and environmental regulation into the research framework, and thereby further enriched and improved the research on the theoretical mechanism of green economic growth. The research conclusion clarified the influence mechanism of foreign capital on the quality of China’s economic development, which was conducive to the formulation of more reasonable policies for attracting investments and to the promotion of the formation of a positive interaction mechanism between environmental regulation and foreign direct investment, which is of great practical significance for China’s economy to achieve sustainable development.

The challenges of economic freedom and the influence on financial performance of China's development: A strategic approach

“…The results of FDI include higher productivity, technological progress, technology transfer, better management, strategic restructuring, marketing skills, which generates technological and economic growth (Boghean & State, 2015;Xiao, Gao, Xu L., Wang, & Wei, 2023). Research by Estrin (2017) shows that government policy (government integrity, tax burden, government spending, fiscal health business, freedom labor freedom, monetary freedom, financial freedom) has an important role in attracting foreign direct institutions (FDI) (Chen, et al, 2021;Minović, Stevanović & Aleksić, 2021).…”

Impact of Two-Way FDI on China’s Environmental Quality: The Perspective of Environmentally Cleaner Production and End Treatment

“…Through an empirical analysis, Ayamba et al found that IFDI is the most important method of technology transfer for investing countries, one which can effectively upgrade the technology of investment inflows and effectively improve local pollution problems [16]. A number of studies have constructed China's green economy index and concluded that foreign direct investment promotes green economic growth through independent innovation and inhibits green economic growth through imitation innovation [17].…”

The Green Engine of Growth: Assessing the Influence of Renewable Energy Consumption and Environmental Policy on China’s Economic Sustainability

“…These findings counter the traditional dichotomy between environmental stewardship and economic growth, suggesting that green technologies and policies can actually bolster economic sustainability. Additionally, research by Xiao et al [11], Lu and Yan [12], and Wang et al [13] emphasizes the importance of foreign direct investment and trade openness in facilitating China's green transition, highlighting the roles of international collaboration and market integration in sustainable development. Nonetheless, China's ongoing dependence on fossil fuels poses a significant challenge to achieving full economic sustainability, as evidenced by studies like those of Sun [14], Ren et al [15], Yang et al [16], and Jiang et al [17], which associate fossil fuel consumption with environmental and economic risks.…”