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Foreign direct investment and manufacturing pollution emissions: A perspective from heterogeneous environmental regulation

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  • Haibo Sun
  • Zhonglu Liu
  • Yingchao Chen

Abstract

Sustainable development has become the consensus of mankind. Reducing manufacturing pollution emissions is critical to manufacturing sustainability. This article explores the influence of heterogeneous environmental regulation and foreign direct investment (FDI) on manufacturing pollution emissions, based on the micro data of Chinese manufacturing enterprises. The results show that FDI significantly increases manufacturing pollution emissions, and both expenditure‐style environmental regulation and investment‐style environmental regulation have an inverted U‐shaped relationship with manufacturing pollution emissions. Moreover, the expenditure‐style environmental regulation can only restrain the manufacturing pollution emissions caused by FDI in the current period, while the investment‐style environmental regulation is not only effective in the current period, but also plays a role in the lag period. Further research finds that both expenditure‐style environmental regulation and investment‐style environmental regulation have significant industrial and regional heterogeneity in reducing manufacturing pollution emissions caused by FDI. Our findings provide a reference for the rational introduction of foreign capital and manufacturing industry sustainable development.

Suggested Citation

  • Haibo Sun & Zhonglu Liu & Yingchao Chen, 2020. "Foreign direct investment and manufacturing pollution emissions: A perspective from heterogeneous environmental regulation," Sustainable Development, John Wiley & Sons, Ltd., vol. 28(5), pages 1376-1387, September.
    • Handle: RePEc:wly:sustdv:v:28:y:2020:i:5:p:1376-1387
    DOI: 10.1002/sd.2091
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