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Energy intensity and foreign direct investment: A Chinese city-level study

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  • Elliott, Robert J.R.
  • Sun, Puyang
  • Chen, Siyang

Abstract

In this paper we investigate the relationship between the energy intensity of Chinese cities and the location of foreign firms employing a unique dataset of 206 of the largest prefecture-level cities between 2005 and 2008. Our results reveal a non linear inverted-U shaped relationship between energy intensity and city-level per capita income with the majority of cities on the downward slope of the curve. We also find evidence of a significant and negative relationship between the foreign direct investment (FDI) flows into a city and energy intensity. However, this effect varies by geographic location reflecting differences in the ability of regions to absorb and benefit from environmental spillovers. The relatively small economic effect of FDI can in part explained by the propensity for foreign firms to invest in energy intensive sectors coupled with the trend for China to invest heavily in capital intensive industries.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 40 (2013)
Issue (Month): C ()
Pages: 484-494

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Handle: RePEc:eee:eneeco:v:40:y:2013:i:c:p:484-494

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Web page: http://www.elsevier.com/locate/eneco

Related research

Keywords: Energy efficiency; Economic growth; Foreign direct investment;

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References

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Cited by:
  1. Robert J R Elliott & Puyang Sun & Tong Zhu, 2014. "Urbanization and Energy Intensity: A Province-level Study for China," Discussion Papers 14-05, Department of Economics, University of Birmingham.

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