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Regional Difference in Spatial Effects: A Theoretical and Empirical Study on the Environmental Effects of FDI and Corruption in China

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  • Dengli Tang
  • Shijie Li
  • Yuanhua Yang
  • Lianglie Gu

Abstract

Environmental pollution has aroused extensive concern worldwide in recent years. Existing studies on the relationship between foreign direct investment (FDI) and environmental pollution have, however, paid little attention to spatial effects and regional corruption’s environmental performance from a spatial perspective. To address this gap, we investigate the spatial agglomeration effects of environmental pollution in China and the environmental effects of FDI and regional corruption using spatial econometric analysis method. The results indicate significant spatial agglomeration effects in environmental pollution. The results of spatial panel data models reveal that the estimation coefficient of FDI is significantly negative, and FDI inflows reduce China’s environmental pollution. Regional corruption is shown to increase environmental pollution, thereby contributing further to environmental degradation. The interaction coefficient of FDI and regional corruption is significantly positive, indicating that regional corruption reduces the environmental benefits derived from FDI. In addition, regional differences in spatial effects verify that regional corruption also reduces the environmental performance of FDI in the central region. Meanwhile, regional corruption increases the environmental aggravation effects of FDI in the eastern region but weakens it in the western region. Our findings lead to some policy recommendations with regard to environmental protection and pollution control.

Suggested Citation

  • Dengli Tang & Shijie Li & Yuanhua Yang & Lianglie Gu, 2020. "Regional Difference in Spatial Effects: A Theoretical and Empirical Study on the Environmental Effects of FDI and Corruption in China," Discrete Dynamics in Nature and Society, Hindawi, vol. 2020, pages 1-12, February.
    • Handle: RePEc:hin:jnddns:8654817
    DOI: 10.1155/2020/8654817
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    Cited by:

    1. Shi Wang & Hua Wang & Qian Sun, 2020. "The Impact of Foreign Direct Investment on Environmental Pollution in China: Corruption Matters," IJERPH, MDPI, vol. 17(18), pages 1-20, September.
    2. Qichang Xie & Yingkun Yan & Xu Wang, 2023. "Assessing the role of foreign direct investment in environmental sustainability: a spatial semiparametric panel approach," Economic Change and Restructuring, Springer, vol. 56(2), pages 1263-1295, April.

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