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Foreign direct investment and environmental pollution in China: a simultaneous equations estimation

Author

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  • BAO, QUN
  • CHEN, YUANYUAN
  • SONG, LIGANG

Abstract

This study investigates the effects of foreign direct investment (FDI) on emissions of five pollutants in China using a panel data set of 29 provinces over the period 1992–2004. The study applies a simultaneous equations estimation technique to estimate the scale, technique and composition effects of FDI on China's overall and regional pollution emissions. The estimation results show that FDI in general helps reduce pollution emissions in China, contributing largely to its technique effect. Capturing both the direct and indirect technique effects improves the accuracy in assessing the environmental impact of the FDI. The study also finds that the environmental impacts of FDI vary significantly among different regions and for different pollutants in China.

Suggested Citation

  • Bao, Qun & Chen, Yuanyuan & Song, Ligang, 2011. "Foreign direct investment and environmental pollution in China: a simultaneous equations estimation," Environment and Development Economics, Cambridge University Press, vol. 16(01), pages 71-92, February.
  • Handle: RePEc:cup:endeec:v:16:y:2011:i:01:p:71-92_00
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    Cited by:

    1. Pasquale Pazienza, 2015. "The Environmental Impact of the FDI Inflow in the Transport Sector of OECD Countries and Policy Implications," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 21(1), pages 105-116, March.
    2. repec:eee:eneeco:v:64:y:2017:i:c:p:206-212 is not listed on IDEAS
    3. Perrings, Charles, 2014. "Environment and development economics 20 years on," Environment and Development Economics, Cambridge University Press, vol. 19(03), pages 333-366, June.
    4. Wilhelm Althammer & Erik Hille, 2016. "Measuring climate policy stringency: a shadow price approach," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(4), pages 607-639, August.
    5. repec:kap:iaecre:v:21:y:2015:i:1:p:105-116 is not listed on IDEAS
    6. Hille, Erik, 2016. "The impact of foreign direct investments on regional air pollution in the Republic of Korea: A way ahead to achieve the green growth strategy?," Annual Conference 2016 (Augsburg): Demographic Change 145517, Verein für Socialpolitik / German Economic Association.
    7. repec:kap:ecopln:v:50:y:2017:i:4:d:10.1007_s10644-016-9191-0 is not listed on IDEAS

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