IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v11y2019i16p4409-d257743.html
   My bibliography  Save this article

Empirical Study of the Impact of Outward Foreign Direct Investment on Water Footprint Benefit in China

Author

Listed:
  • Daxue KAN

    (School of Economics and Trade, Nanchang Institute of Technology, No. 289 Tianxiang Road, Nanchang 330099, China)

  • Weichiao HUANG

    (Department of Economics, Western Michigan University, 1903 W. Michigan Ave., Kalamazoo, MI 49008, USA)

Abstract

How to enhance the water footprint benefit in conjunction with outward foreign direct investment (OFDI) is of great significance to reconcile the contradiction between supply and demand of water resources. This paper examines the effect of OFDI on the water footprint benefit using system GMM (Generalized Method of Moments) on a dynamic panel data. The results revealed that, in general, OFDI was not conducive to enhancing social, spatial, and environmental benefits of China’s water footprint, but was conducive for improving water footprint economic benefits. The results also showed that different types of OFDI exert differential effects on water footprint benefits. Specifically, the market-seeking and resource-seeking types of OFDI are not conducive for enhancing social and spatial benefits of China’s water footprint, but have improved (although not significantly) economic benefits of the water footprint. However, the market-seeking type of OFDI is conducive for improving environmental benefits of the water footprint, while the resource-seeking OFDI is not conducive for improving environmental benefits of the water footprint. In addition, the technology-seeking OFDI is conducive to the social, economic, spatial, and environmental benefits of China’s water footprint. Furthermore, the path-wise OFDI (investing in developing countries) is not conducive to enhancing social, spatial, and environmental benefits of China’s water footprint, but has improved (although not significantly) the economic benefits of China’s water footprint. On the other hand, the inverse OFDI (investing in developed countries) is conducive to China’s water footprint including its social, economic, spatial, and environmental benefits. The findings from this study have relevant policy implications and can help provide some policy prescriptions for an economy such as China to engage in OFDI and enhance water footprint benefits. For instance, in addition to expanding market-seeking and resource- seeking OFDI, China should actively increase the scale of technology-seeking OFDI. In addition, while continuing to expand path-wise OFDI, China should further increase the scale of inverse OFDI. By taking advantage of the complementary and synergetic effects of different types of OFDI, an economy can capture the whole effects of OFDI to reap the water footprint’s full social, economic, spatial, and environmental benefits.

Suggested Citation

  • Daxue KAN & Weichiao HUANG, 2019. "Empirical Study of the Impact of Outward Foreign Direct Investment on Water Footprint Benefit in China," Sustainability, MDPI, vol. 11(16), pages 1-16, August.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:16:p:4409-:d:257743
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/11/16/4409/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/11/16/4409/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Huang, Youxing & Zhang, Yan, 2017. "How does outward foreign direct investment enhance firm productivity? A heterogeneous empirical analysis from Chinese manufacturing," China Economic Review, Elsevier, vol. 44(C), pages 1-15.
    2. Chi Zhang, 2017. "Population in China," Europe-Asia Studies, Taylor & Francis Journals, vol. 69(8), pages 1333-1334, September.
    3. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    4. Andreff, Wladimir & Andreff, Madeleine, 2017. "Multinational companies from transition economies and their outward foreign direct investment," Russian Journal of Economics, Elsevier, vol. 3(4), pages 445-474.
    5. Yue Zhang & Kai Huang & Yajuan Yu & Tingting Hu & Jing Wei, 2015. "Impact of climate change and drought regime on water footprint of crop production: the case of Lake Dianchi Basin, China," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 79(1), pages 549-566, October.
    6. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    7. Nana Yang & Jiansong Li & Binbin Lu & Minghai Luo & Linze Li, 2019. "Exploring the Spatial Pattern and Influencing Factors of Land Carrying Capacity in Wuhan," Sustainability, MDPI, vol. 11(10), pages 1-16, May.
    8. Castellanos, M.T. & Cartagena, M.C. & Requejo, M.I. & Arce, A. & Cabello, M.J. & Ribas, F. & Tarquis, A.M., 2016. "Agronomic concepts in water footprint assessment: A case of study in a fertirrigated melon crop under semiarid conditions," Agricultural Water Management, Elsevier, vol. 170(C), pages 81-90.
    9. Wladimir Andreff & Madeleine Andreff, 2017. "Multinational companies from transition economies and their outward foreign direct investment," Post-Print hal-03207032, HAL.
    10. Fangfang Wang & Juan Liu & Cong Su, 2017. "Outward Foreign Direct Investment and Export Performance in China," Canadian Public Policy, University of Toronto Press, vol. 43(s2), pages 72-87, April.
    11. Wladimir Andreff & Madeleine Andreff, 2017. "Multinational companies from transition economies and their outward foreign direct investment," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-03207032, HAL.
    12. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    13. Xin Li & Hsu Ling Chang & Chi Wei Su & Yin Dai, 2017. "Does foreign direct investment promote exports in China?," China Finance Review International, Emerald Group Publishing Limited, vol. 7(2), pages 185-202, May.
    14. A. Hoekstra & A. Chapagain, 2007. "Water footprints of nations: Water use by people as a function of their consumption pattern," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 21(1), pages 35-48, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Daxue Kan & Weichiao Huang, 2020. "An Empirical Study of the Impact of Urbanization on Industry Water Footprint in China," Sustainability, MDPI, vol. 12(6), pages 1-21, March.
    2. Daxue Kan & Wenqing Yao & Lianju Lyu & Weichiao Huang, 2022. "Temporal and Spatial Difference Analysis and Impact Factors of Water Ecological Civilization Level: Evidence from Jiangxi Province, China," Land, MDPI, vol. 11(9), pages 1-19, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Xing Zhou & Quan Guo & Ming Zhang, 2021. "Impacts of OFDI on Host Country Energy Consumption and Home Country Energy Efficiency Based on a Belt and Road Perspective," Energies, MDPI, vol. 14(21), pages 1-25, November.
    2. Malgorzata Jaworek & Wlodzimierz Karaszewski, 2021. "The Largest Non-Financial Multinational Enterprises in the World and Those in Developing and Transition Economies," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 683-696.
    3. Fadzli Adam, 2020. "Foreign Capital and Domestic Productivity in Developing Countries: An Empirical Analysis," Asian Development Policy Review, Asian Economic and Social Society, vol. 8(4), pages 288-297, December.
    4. Daxue Kan & Weichiao Huang, 2020. "An Empirical Study of the Impact of Urbanization on Industry Water Footprint in China," Sustainability, MDPI, vol. 12(6), pages 1-21, March.
    5. Daniel Ştefan Armeanu & Georgeta Vintilă & Ştefan Cristian Gherghina, 2017. "Empirical Study towards the Drivers of Sustainable Economic Growth in EU-28 Countries," Sustainability, MDPI, vol. 10(1), pages 1-22, December.
    6. Youngho Kang & Byung-Yeon Kim, 2018. "Immigration and economic growth: do origin and destination matter?," Applied Economics, Taylor & Francis Journals, vol. 50(46), pages 4968-4984, October.
    7. Cho, Seo-young & Vadlamannati, Krishna Chaitanya, 2010. "Compliance for big brothers: An empirical analysis on the impact of the anti-trafficking protocol," University of Göttingen Working Papers in Economics 118, University of Goettingen, Department of Economics.
    8. Vieira, Flávio & MacDonald, Ronald & Damasceno, Aderbal, 2012. "The role of institutions in cross-section income and panel data growth models: A deeper investigation on the weakness and proliferation of instruments," Journal of Comparative Economics, Elsevier, vol. 40(1), pages 127-140.
    9. Hakkala, Katariina & Heyman, Fredrik & Sjöholm, Fredrik, 2007. "Cross-Border Acquisitions, Multinationals and Wage Elasticities," Working Paper Series 709, Research Institute of Industrial Economics.
    10. Tuba DERYA-BASKAN & Eda BALIKÇIOĞLU, 2018. "Firma Bileşenlerinin Halka Açık Perakende Firmalarında Kurumlar Vergisine Etkisi," Sosyoekonomi Journal, Sosyoekonomi Society, issue 26(37).
    11. Kitazawa, Yoshitsugu, 2001. "Exponential regression of dynamic panel data models," Economics Letters, Elsevier, vol. 73(1), pages 7-13, October.
    12. Nuno Carlos LEITÃO & Muhammad SHAHBAZ, 2012. "Migration and Tourism Demand," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(567)), pages 39-48, February.
    13. Alessandra Canepa & Fawaz Khaled, 2018. "Housing, Housing Finance and Credit Risk," IJFS, MDPI, vol. 6(2), pages 1-23, May.
    14. Tahir Andrabi & Jishnu Das & Asim Ijaz Khwaja & Tristan Zajonc, 2011. "Do Value-Added Estimates Add Value? Accounting for Learning Dynamics," American Economic Journal: Applied Economics, American Economic Association, vol. 3(3), pages 29-54, July.
    15. Efobi, Uchenna & Asongu, Simplice & Okafor, Chinelo & Tchamyou, Vanessa & Tanankem, Belmondo, 2016. "Diaspora Remittance Inflow, Financial Development and the Industrialisation of Africa," MPRA Paper 76121, University Library of Munich, Germany.
    16. Han, Chirok & Kim, Hyoungjong, 2014. "The role of constant instruments in dynamic panel estimation," Economics Letters, Elsevier, vol. 124(3), pages 500-503.
    17. Emrah Kocak & Hayriye Hilal Baglitas, 2022. "The path to sustainable municipal solid waste management: Do human development, energy efficiency, and income inequality matter?," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(6), pages 1947-1962, December.
    18. Huy Quang Doan, 2019. "Trade, Institutional Quality and Income: Empirical Evidence for Sub-Saharan Africa," Economies, MDPI, vol. 7(2), pages 1-23, May.
    19. Eschenhof, Sabine, 2009. "Standard Taylor rules revisited: A cross country study for European countries," Darmstadt Discussion Papers in Economics 196, Darmstadt University of Technology, Department of Law and Economics.
    20. Kjetil Bjorvatn & Mohammad Reza Farzanegan, 2014. "Resource Rents, Power, and Political Stability," CESifo Working Paper Series 4727, CESifo.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:11:y:2019:i:16:p:4409-:d:257743. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.