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Revisiting the Green Growth Effect of Foreign Direct Investment from the Perspective of Environmental Regulation: Evidence from China

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  • Deyun Xiao

    (School of Economics, Wuhan University of Technology, Wuhan 430070, China)

  • Luyao Gao

    (School of Economics, Wuhan University of Technology, Wuhan 430070, China)

  • Lijia Xu

    (School of Economics, Wuhan University of Technology, Wuhan 430070, China)

  • Zongjun Wang

    (School of Management, Huazhong University of Science and Technology, Wuhan 430074, China)

  • Wu Wei

    (School of Economics and Management, Wuhan University, Wuhan 430072, China)

Abstract

The inflow of foreign direct investment (FDI) has both advanced China’s economic development process and influenced the ecological quality of China’s regions. Under the deepening of economic globalization and the continuous deterioration in environmental quality, the correlation mechanism between foreign direct investment, environmental regulation, and economic growth is becoming increasingly complex. Therefore, based on the slacks-based measure (SBM) model and the Global Malmquist-Luenberger (GML) index, this study measured the level of green economic growth using data from 30 provinces and cities from 2004–2019 and constructed a panel fixed-effect regression model to study the effect of foreign direct investment on green economic growth in China. The study found that foreign direct investment significantly promoted green economic growth in China, foreign direct investment promoted green economic growth through independent innovation and inhibited green economic growth through imitation innovation, and environmental regulation moderated the impact of foreign direct investment on green economic growth. This paper incorporated foreign direct investment, heterogeneous technological innovation, green economic growth, and environmental regulation into the research framework, and thereby further enriched and improved the research on the theoretical mechanism of green economic growth. The research conclusion clarified the influence mechanism of foreign capital on the quality of China’s economic development, which was conducive to the formulation of more reasonable policies for attracting investments and to the promotion of the formation of a positive interaction mechanism between environmental regulation and foreign direct investment, which is of great practical significance for China’s economy to achieve sustainable development.

Suggested Citation

  • Deyun Xiao & Luyao Gao & Lijia Xu & Zongjun Wang & Wu Wei, 2023. "Revisiting the Green Growth Effect of Foreign Direct Investment from the Perspective of Environmental Regulation: Evidence from China," IJERPH, MDPI, vol. 20(3), pages 1-20, February.
    • Handle: RePEc:gam:jijerp:v:20:y:2023:i:3:p:2655-:d:1054465
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    1. Zhenya Zhang & Wanping Yang & Dong Li & Yajuan Wang, 2023. "Impact of Two-Way FDI on China’s Environmental Quality: The Perspective of Environmentally Cleaner Production and End Treatment," IJERPH, MDPI, vol. 20(5), pages 1-31, February.

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