The impact of FDI quality characteristics on carbon emission intensity: Evidence from China

Abstract

Using data from 30 provincial-level in China during 2005–2019, this paper investigates the impact of foreign direct investment (FDI) quality characteristics on carbon emission intensity. Based on the Copeland-Taylor model, the mechanism of the impact of FDI quality characteristics on carbon emission intensity is also investigated. The key findings demonstrate that FDI quality traits considerably lower regional carbon intensity, and the result is still robust after considering the spatial correlation and using IV-2sls in consideration of endogeneity. The FDI quality characteristics mainly reduce carbon emission intensity through green technology improvement, industrial structure, and factor endowment structure optimization. Moreover, further evidence shows that there are heterogeneous effects with regard to regional and FDI quality characteristics. From the standpoint of FDI quality characteristics, this study adds to the literature on FDI and environmental pollution. Policy recommendations for China are also discussed in this paper, which can serve as a guide for other emerging nations.

Linking foreign investment and eco-innovation to sustainable development goals through a spatial mediation-moderation model

“…They confirmed that FDI plays a vital role in eco-innovation to mitigate its negative environmental consequences and reduce carbon emissions (Li et al 2019). Consequently, FDI boosts the local enterprises to adopt eco-innovation practices and the demand for clean products, thereby mitigating the intensity of carbon emissions in the host countries (Ma et al 2022). Therefore, we believe that the economic environment must be transformed to attract FDI, with a two-fold goal: first, MENA countries must build an enabling environment; second, they have to support eco-innovation using taxes and public procurement to ensure climate protection and achieve SDGs target, while enhancing economic growth.…”