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Carbon Emission Effects of the Coordinated Development of Two-Way Foreign Direct Investment in China

Author

Listed:
  • Yafei Wang

    (School of Economics and Management, Chongqing Normal University, Chongqing 401331, China)

  • Meng Liao

    (School of Economics and Management, Chongqing Normal University, Chongqing 401331, China)

  • Yafei Wang

    (Institute of National Accounts, Beijing Normal University, Beijing 100875, China)

  • Arunima Malik

    (ISA, School of Physics A28, The University of Sydney, Sydney, NSW 2006, Australia
    Discipline of Accounting, Business School, The University of Sydney, Sydney, NSW 2006, Australia)

  • Lixiao Xu

    (Institute of National Accounts, Beijing Normal University, Beijing 100875, China)

Abstract

This paper innovatively combines Inward Foreign Direct Investment (IFDI) and Outward Foreign Direct Investment (OFDI) as a measure of two-way FDI coordinated development to consider the coupling and coordination level of FDI. Under the analytical framework of Copeland and Taylor (1994), it introduces this new measure to investigate the effects of China’s carbon emissions during 2004–2016, using the spatial econometric model and the differential generalized method of moments. We find that China’s carbon emissions show significant spatial correlation characteristics and interregional diffusion, which indicates that regional coordinated cooperative governance is key to carbon emission mitigation in China, and that China’s two-way FDI coordinated development has presented a significant braking effect on carbon emissions during the research period. Furthermore, we decompose the effects of the two-way FDI on carbon emissions into three parts. This decomposition shows that the scale effect is positive, while both the composition and the technique effects are negative. The technique effect essentially dominates the emission reduction induced by the coordinated development of the two-way FDI.

Suggested Citation

  • Yafei Wang & Meng Liao & Yafei Wang & Arunima Malik & Lixiao Xu, 2019. "Carbon Emission Effects of the Coordinated Development of Two-Way Foreign Direct Investment in China," Sustainability, MDPI, vol. 11(8), pages 1-24, April.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:8:p:2428-:d:225524
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    2. Ma, Guangcheng & Qin, Jiahong & Zhang, Yumeng, 2023. "Does the carbon emissions trading system reduce carbon emissions by promoting two-way FDI in developing countries? Evidence from Chinese listed companies and cities," Energy Economics, Elsevier, vol. 120(C).
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    7. Shaolong Zeng & Yiqun Liu & Junjie Ding & Danlu Xu, 2020. "An Empirical Analysis of Energy Consumption, FDI and High Quality Development Based on Time Series Data of Zhejiang Province," IJERPH, MDPI, vol. 17(9), pages 1-17, May.
    8. Ma, Guangcheng & Cao, Jianhua & Famanta, Mahamane, 2023. "Does the coordinated development of two-way FDI increase the green energy efficiency of Chinese cities? Evidence from Chinese listed companies," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 59-77.
    9. Mengzhen Wang & Xingong Ding & Baekryul Choi, 2023. "FDI or International-Trade-Driven Green Growth of 24 Korean Manufacturing Industries? Evidence from Heterogeneous Panel Based on Non-Causality Test," Sustainability, MDPI, vol. 15(7), pages 1-20, March.

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