Foreign direct investment and environmental pollution in China: a simultaneous equations estimation

Qun Bao · Yuanyuan Chen · Ligang Song

123 citations0/0 files storedEnvironment and Development Economics

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Energy, Environment, Economic Growth International Business and FDI Efficiency Analysis Using DEA

Abstract

ABSTRACT This study investigates the effects of foreign direct investment (FDI) on emissions of five pollutants in China using a panel data set of 29 provinces over the period 1992–2004. The study applies a simultaneous equations estimation technique to estimate the scale, technique and composition effects of FDI on China's overall and regional pollution emissions. The estimation results show that FDI in general helps reduce pollution emissions in China, contributing largely to its technique effect. Capturing both the direct and indirect technique effects improves the accuracy in assessing the environmental impact of the FDI. The study also finds that the environmental impacts of FDI vary significantly among different regions and for different pollutants in China.

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References

2001Econometric Analysis of Cross Section and Panel Data 1991Environmental Impacts of a North American Free Trade Agreement 1998Is Free Trade Good for the Environment?2001International data on educational attainment: updates and implications 2004Trade, Growth, and the Environment 2004Trade, Growth, and the Environment 2003Moving to greener pastures? Multinationals and the pollution haven hypothesis 2000What are the determinants of the location of foreign direct investment? The Chinese experience

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