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Growth, Foreign Direct Investment and the Environment: Evidence from Chinese Cities

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  • Cole, Matthew A.
  • Elliott, Robert J.R.
  • Zhang, Jing

Abstract

In this paper we investigate the relationship between economic growth and industrial pollution emissions in China using data for 112 major cities between 2001 and 2004. Using disaggregated data we separate FDI inflows from Hong Kong, Macao and Taiwan from those of other foreign economies. We examine four industrial water pollution indicators (wastewater, chemical oxygen demand, hexavalent chromium compounds, and petroleum-like matter) and four industrial air pollution indicators (waste gas, sulphur dioxide, soot and dust). Our results suggest that most air and water emissions rise with increases in economic growth at current income levels. The share of total output produced by firms from Hong Kong, Macao and Taiwan has a positive effect on emissions although this effect is only significant for three industrial water pollution emissions. The share of total output produced by firms from other foreign economies can be beneficial, detrimental or neutral, depending on the pollutants considered. --

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Bibliographic Info

Paper provided by Verein für Socialpolitik, Research Committee Development Economics in its series Proceedings of the German Development Economics Conference, Frankfurt a.M. 2009 with number 41.

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Date of creation: 2009
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Handle: RePEc:zbw:gdec09:41

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Keywords: FDI; economic growth; pollution; cities;

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References

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  1. Kolstad, Charles D. & Xing, Yuqing, 1998. "Do Lax Environmental Regulations Attract Foreign Investment?," University of California at Santa Barbara, Economics Working Paper Series qt3268z4rx, Department of Economics, UC Santa Barbara.
  2. Cole, Matthew A. & Elliott, Robert J.R. & Wu, Shanshan, 2008. "Industrial activity and the environment in China: An industry-level analysis," China Economic Review, Elsevier, Elsevier, vol. 19(3), pages 393-408, September.
  3. Gene M. Grossman & Alan B. Krueger, 1994. "Economic Growth and the Environment," NBER Working Papers 4634, National Bureau of Economic Research, Inc.
  4. Cole, Matthew A. & Elliott, Robert J. R., 2003. "Determining the trade-environment composition effect: the role of capital, labor and environmental regulations," Journal of Environmental Economics and Management, Elsevier, vol. 46(3), pages 363-383, November.
  5. Pargal, Sheoli & Wheeler, David, 1996. "Informal Regulation of Industrial Pollution in Developing Countries: Evidence from Indonesia," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 104(6), pages 1314-27, December.
  6. Werner Antweiler & Brian R. Copeland & M. Scott Taylor, 2001. "Is Free Trade Good for the Environment?," American Economic Review, American Economic Association, American Economic Association, vol. 91(4), pages 877-908, September.
  7. Eskeland, Gunnar S. & Harrison, Ann E., 1997. "Moving to greener pastures : multinationals and the pollution-haven hypothesis," Policy Research Working Paper Series 1744, The World Bank.
  8. Selden Thomas M. & Song Daqing, 1994. "Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 147-162, September.
  9. Matthew A. Cole & Robert J. R. Elliott, 2005. "FDI and the Capital Intensity of "Dirty" Sectors: A Missing Piece of the Pollution Haven Puzzle," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 9(4), pages 530-548, November.
  10. Cole, Matthew A. & Elliott, Robert J.R. & Shimamoto, Kenichi, 2005. "Industrial characteristics, environmental regulations and air pollution: an analysis of the UK manufacturing sector," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 121-143, July.
  11. David I. Stern & Tony Auld & Michael S. Common & Kali K. Sanyal, 1998. "Is there an environmental Kuznets curve for sulfur?," Working Papers in Ecological Economics, Australian National University, Centre for Resource and Environmental Studies, Ecological Economics Program 9804, Australian National University, Centre for Resource and Environmental Studies, Ecological Economics Program.
  12. Lucas W. Davis & Matthew E. Kahn, 2008. "International Trade in Used Durable Goods: The Environmental Consequences of NAFTA," NBER Working Papers 14565, National Bureau of Economic Research, Inc.
  13. William Harbaugh & Arik Levinson & David Wilson, 2000. "Reexamining the Empirical Evidence for an Environmental Kuznets Curve," NBER Working Papers 7711, National Bureau of Economic Research, Inc.
  14. Shafik, Nemat, 1994. "Economic Development and Environmental Quality: An Econometric Analysis," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 757-73, Supplemen.
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Cited by:
  1. Jing Lan & Makoto Kakinaka & Xianguo Huang, 2012. "Foreign Direct Investment, Human Capital and Environmental Pollution in China," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 51(2), pages 255-275, February.
  2. Hübler, Michael & Glas, Alexander, 2013. "The energy-bias of North-South technology spillovers: A global, bilateral, bisectoral trade analysis," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 13-031, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  3. Elliott, Robert J.R. & Sun, Puyang & Chen, Siyang, 2013. "Energy intensity and foreign direct investment: A Chinese city-level study," Energy Economics, Elsevier, Elsevier, vol. 40(C), pages 484-494.
  4. Yang, Boqiong & Chen, Jianguo, 2011. "An empirical model of the environmental effect of FDI in host countries: Analysis based on Chinese panel data," IAMO Forum 2011: Will the "BRICs Decade" Continue? – Prospects for Trade and Growth 3, Leib­niz Institute of Agricultural Development in Central and Eastern Europe (IAMO).
  5. Mukherjee, Sacchidananda & Chakraborty, Debashis, 2013. "Negative Influence of Fiscal Subsidies on Environment: Empirical Evidence from Cross-Country Estimation," Working Papers, National Institute of Public Finance and Policy 13/117, National Institute of Public Finance and Policy.
  6. You, Jing & Huang, Yongfu, 2013. "Green-to-Grey China: Determinants and Forecasts of its Green Growth," MPRA Paper 57468, University Library of Munich, Germany, revised 16 Jul 2014.
  7. Al-mulali, Usama & Foon Tang, Chor, 2013. "Investigating the validity of pollution haven hypothesis in the gulf cooperation council (GCC) countries," Energy Policy, Elsevier, Elsevier, vol. 60(C), pages 813-819.
  8. Anne MUSSON, 2012. "The Importance of the Stakeholders' Involvement in Building Indicators. The Case of Environmental Regulation in France," Working Papers 2011-2012_8, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Apr 2014.

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