Does Foreign Direct Investment Affect Green Growth? Evidence from China’s Experience

Yue, Shujing; Yang, Yang; Hu, Yuqi

doi:10.3390/su8020158

Cited by 54 publications

(28 citation statements)

References 33 publications

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“…Considering that China is in a developing phase, it requires sustainable economic development, because facing most of the hitches which are presently confronted by China rely on economic growth being solved (Yue et al 2016). The Chinese government is looking for its capital abroad after heavy investment in many domestic industries such as cement, coal and solar panels.…”

Section: Resultsmentioning

confidence: 99%

The Effect of Exchange Rate Volatility on International Trade and Foreign Direct Investment (FDI) in Developing Countries along “One Belt and One Road”

Lefen

2018

IJFS

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The “One Belt and One Road” (OBOR) project was started by the Chinese government with the aim of achieving sustainable economic development and increasing cooperation with other countries. This project has five major objectives, which include (i) increasing trade flow, (ii) encouraging policy coordination, (iii) improving connectivity, (iv) obtaining financial integration, and (v) fortifying closeness between people. This paper aims to analyze the effect of exchange rate volatility on international trade and foreign direct investment (FDI) in developing countries along “One Belt and One Road”. We selected seven developing countries which are part of this project, namely Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. We collected panel data for the period 1995 to 2016 from the U.S. Heritage Foundation, International Financial Statistics (IFS) (a database developed by the International Monetary Fund), and World Development Indicators (WDI) (a database developed by the World Bank). We applied Generalized Autoregressive Conditional Heteroscedasticity (GARCH) (1,1) and threshold-Generalized Autoregressive Conditional Heteroscedasticity (TGARCH) (1,1) models to measure the exchange rate volatility. Furthermore, we employed a fixed effect model to analyze the relationship of exchange rate volatility with international trade and FDI. The results of this paper revealed that exchange rate volatility affects both international trade and FDI significantly but negatively in OBOR-related countries, which correlates with the economic theory arguing that exchange rate volatility may hurt international trade and FDI. It can be concluded that exchange rate volatility can adversely affect international trade and FDI inflows in OBOR-related countries.

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Section: Resultsmentioning

confidence: 99%

The Effect of Exchange Rate Volatility on International Trade and Foreign Direct Investment (FDI) in Developing Countries along “One Belt and One Road”

Lefen

2018

IJFS

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“…Currently, scholars mainly discuss the impact of FDI on economic inclusiveness (Tan et al 2016) or the impact of FDI on economic green growth (Yue et al 2016). However, whether FDI can promote the inclusive and green growth of the economy has not yet been tested.…”

Section: Introductionmentioning

confidence: 99%

Does Foreign Direct Investment Improve Inclusive Green Growth? Empirical Evidence from China

Zhu

A-zhong

2018

Economies

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Abstract:Inclusive green growth is a sustainable development mode in pursuit of economic growth, social equity, and environmental protection. At present, a large number of articles have discussed the impact of foreign direct investment (FDI) on economic growth, green growth, and inclusive growth. However, the research about inclusive green growth is mainly descriptive. This paper constructs China's inclusive green growth index and analyzes the impact of FDI on inclusive green growth in China. Specifically, by constructing a super efficiency slacks-based measure model (which has two undesirable outputs: income disparity and environmental pollution) to calculate the Inclusive green growth index, this paper compares and analyses the differences and regional characteristics of China's total factor productivity, inclusive total factor productivity, green total factor productivity, and inclusive green total factor productivity. We find that total factor productivity is decreasing after considering undesirable output, and the traditional total factor productivity is higher than the inclusive green total factor productivity by 0.112; at the regional level, the trend of the total factor productivity is gradually decreasing from east to west, which indicates that there are regional differences in inclusive green growth of China, and there is room for improvement. Meanwhile, we construct a panel vector autoregressive model (PVAR) and use generalized impulse response function and variance decomposition to analyse the influence of FDI on China's inclusive green total factor productivity. The results show that FDI is beneficial to the promotion of inclusive green total factor productivity in China, and environmental pollution in the FDI process is an important factor hindering the inclusive green total factor productivity.

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“…In addition, it is found that FDI still has a certain inhibitory effect on green technological progress. This is different from the result obtained by Yue et al [47]. The main reason is that this paper is based on the basic framework of green technology progress to construct an empirical analysis model, compared with the direct use of FDI flow or stock to analyze its impact on green technology progress from the perspective of R&D capital stock is more scientific.…”

Section: The Comparative Analysis Of Reverse Green Technology Progresmentioning

confidence: 62%

Does the Impact of China’s Outward Foreign Direct Investment on Reverse Green Technology Process Differ across Countries?

Zhu

A-zhong

2018

Sustainability

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The reverse technology spillover effect of Outward Foreign Direct Investment (OFDI) has been widely discussed. In the context of pursuing green growth, a few scholars began to study the impact of OFDI on home country green technological progress or green total factor productivity. However, few of these papers have made a thorough analysis of how OFDI affects the home country’s green technological progress, and have not considered the impact of different types of OFDI on green technological progress. This paper extends the basic analysis framework of technological progress to green technological progress, and discusses for the first time the ways for China to invest in developed and developing countries to achieve green technological progress. Specifically, this paper combines the global Malmquist productivity concept with the directional distance function to construct the global Malmquist Luenberger (GML) index to describe green technological progress of China’s provinces, and uses panel data model from 2003 to 2016 to study the impact of China’s investment in different types of countries. The results show that: (1) China’s investment in developed countries can bring reverse green technology spillovers and promote China’s green technology progress. But this is also affected by China’s domestic human capital stock, the increase in human capital stock is conducive to the absorption of green technology. (2) OFDI flows to transition or developing countries have failed to bring about green technological progress, but domestic R&D capital stock can produce a control response. (3) Environmental regulation, import trade and domestic R&D capital stock can bring positive effects on green technology progress, while foreign direct investment, fiscal decentralization and economic growth hinder green technology progress. (4) There is regional heterogeneity in the impact of OFDI with different directions on green technological progress. Because of environmental regulation and economic development, the eastern region of China is easier to obtain reverse green technology progress than the central and western regions in the process of OFDI.

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Does Foreign Direct Investment Affect Green Growth? Evidence from China’s Experience

Cited by 54 publications

References 33 publications

The Effect of Exchange Rate Volatility on International Trade and Foreign Direct Investment (FDI) in Developing Countries along “One Belt and One Road”

The Effect of Exchange Rate Volatility on International Trade and Foreign Direct Investment (FDI) in Developing Countries along “One Belt and One Road”

Does Foreign Direct Investment Improve Inclusive Green Growth? Empirical Evidence from China

Does the Impact of China’s Outward Foreign Direct Investment on Reverse Green Technology Process Differ across Countries?

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