Environmental regulation, hidden economy, and China's outward foreign direct investment

Gong, Mengqi; Yi, Ming; Liu, Haiyun; Jin, Xu

doi:10.1016/j.cjpre.2021.04.009

Cited by 10 publications

(14 citation statements)

References 10 publications

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“…This finding supports other studies conducted in this area (Dong et al, 2022;Gong et al, 2021;Liu, Zhao et al, 2021), but they mainly focus on the influence of environmental regulations on OFDI, neglecting the direct impact of AP. For example, Gong et al (2021) show that environmental regulations significantly impact OFDI growth. Dong et al (2022) find that strict environmental regulations induce firms to relocate factories to other countries through OFDI.…”

Section: Empirical Results and Discussionsupporting

confidence: 90%

“…This finding is consistent with the FEH (Leiter et al, 2011). When the newly revised LPCAP came into force in 2016, firms needed to bear the cost of controlling pollution and faced financing constraints (Gong et al, 2021). Nevertheless, firms could still benefit from rich endowments in China; hence, they continued to produce in the country.…”

Section: Empirical Results and Discussionmentioning

confidence: 99%

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The Nexus Between Air Pollution and Outward Foreign Direct Investment

Zhao

2023

SAGE Open

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This study examines the causal relationship between air pollution ( AP) and outward foreign direct investment ( OFDI) in China by applying the bootstrap rolling-window full- and subsample Granger causality test in a sample from 2013 to 2022. We find that AP negatively influenced OFDI in 2016, while this influence became positive at the end of 2019. The results confirm the coexistence of the pollution haven hypothesis, factor endowment hypothesis, and Porter hypothesis. In turn, OFDI negatively influenced AP in 2019, which proves the “composition effect” and “technique effect,” implying that OFDI brings better air quality by optimizing the economic structure and promoting green technology. However, this influence became positive in 2020, which is consistent with the “scale effect,” indicating that OFDI worsens air quality by expanding production. This research provides insights for the government to coordinate OFDI growth and carbon neutralization to achieve sustainable development. It also has implications for firms to reduce environmental costs through OFDI.

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Section: Empirical Results and Discussionsupporting

confidence: 90%

Section: Empirical Results and Discussionmentioning

confidence: 99%

The Nexus Between Air Pollution and Outward Foreign Direct Investment

Zhao

2023

SAGE Open

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“…In other literature, Gong et al,(2020) suggests that business expansion can be encouraged in the short term and in the long term, especially to overcome unemployment that occurs due to changes in the economic structure in an area with a focus on increasing FDI entering the region. the.…”

Section: Resultsmentioning

confidence: 99%

Business Capital Funding Through the Financial Sector to Reduce Unemployment in Indonesia

Kusuma

Muthmainnah

2022

JEP

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This research aimed to study the role of the financial sector and foreign investment in increasing domestic production output. Where the increase in production output will increase the factors of production, one of which is labor. The data used in this study are annual time series data from the 2004 to 2021, and this study employed the Error Correction Model (ECM) approach to estimate the short-term effect and OLS to determine the long-term effect. The results showed that funding growth through the financial sector to the industrial sector in Indonesia has grown consistently since 2004 which has continued to encourage improved economic performance after the 1998 crisis. There is also a relationship between financial variables and fiscal policy on unemployment in both the short and long term. There are several ways to deal with unemployment both in the long term and in the short term, such as when an economic slowdown occurs. By increasing FDI, bank credit and funding in the the capital market, the private sector can continue to expand its business. This private expansion phase will increase the output of goods or services. With the increase in production output, employment will continue to be positive.

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“…Therefore, how to improve the quality of the ecological environment has become a key task of the Chinese government. In recent years, the Chinese government has introduced a series of strict pollution control measures to enhance the intensity of its environmental regulations and improve environmental quality (Gong et al 2020; Yang and Wang 2022). To meet the environmental regulatory standards stipulated by the government, Chinese enterprises have gradually increased their investment in R&D on green technologies and upgraded their existing environmental performance and technological processes.…”

Section: Introductionmentioning

confidence: 99%

“…In recent years, scholars have begun to explore the impact of home country environmental regulations on OFDI and obtained contrasting ndings. On the one hand, enterprises prefer OFDI to avoid the higher pollution control costs caused by environmental regulations (Gong et al 2020; Cole et al 2004). On the other hand, other scholars argue that strict environmental regulations will reduce the willingness of companies to operate across borders (Markusen 1997).…”

Section: Introductionmentioning

confidence: 99%

Environmental regulations and outward foreign direct investment—empirical evidence from Chinese enterprises

Zhang

2022

Environ Sci Pollut Res

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In the context of the new economic normal, environmental protection and economic growth have become the focus of academic attention. This paper explores the effect and impact mechanism of environmental regulations on the outward foreign direct investment (OFDI) of enterprises by using data from the China Industrial Enterprise Database and the Directory of Overseas Investment Enterprises (Institutions) for years 2004 to 2010. The ndings are summarised as follows. Firstly, environmental regulations have a signi cant positive effect on the OFDI of Chinese enterprises, and this result remains robust after considering the outcomes of robustness tests and endogeneity issues. Secondly, the promotion effect of environmental regulations on the OFDI of Chinese enterprises obviously differs across investment motivations and industry characteristics. Thirdly, productivity gains are important channels through which environmental regulations promote the OFDI of enterprises. These ndings have great signi cance for the effective formulation of environmental regulatory policies and the stable development of the OFDI of Chinese enterprises.

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Environmental regulation, hidden economy, and China's outward foreign direct investment

Cited by 10 publications

References 10 publications

The Nexus Between Air Pollution and Outward Foreign Direct Investment

The Nexus Between Air Pollution and Outward Foreign Direct Investment

Business Capital Funding Through the Financial Sector to Reduce Unemployment in Indonesia

Environmental regulations and outward foreign direct investment—empirical evidence from Chinese enterprises

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