Research on the impact of public environmental participation on foreign direct investment: evidence from China

Abstract

Since the reform and opening up, the scale of foreign direct investment (FDI) inflows into China has been continuously expanding, but the imperfect environmental governance mechanism has led to increasingly severe environmental problems in China. This paper studies the impact and mechanism of public environmental participation (PEP) on foreign direct investment (FDI). The results show that PEP has a significant negative impact on the FDI inflow of enterprises. Hindrance effect of PEP on enterprise FDI is more obvious in economically developed eastern regions, coastal cities and first-tier cities. PEP has a greater impact on FDI in high-tech industries. The economic growth target has a restraining effect on China's environmental protection, weakening public supervision of FDI. The constraint of economic growth targets increases the pressure to develop the economy, and weakens the inhibitory effect of PEP on corporate FDI. The constraint of environmental objectives increases the pressure of local governments on environmental assessment, and strengthens the hindrance effect of PEP on enterprise FDI. This study provides important empirical evidence for improving China's environmental governance system and high-quality utilization of foreign investment.