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Non-Linear Impact of Global FDI and Chinese OFDI on Green Growth in Belt and Road Economies: A Comparative Panel Data Analysis

Author

Listed:
  • Shah Mir Mowahed

    (Hunan University)

  • Jingjing Yang

    (Hunan University)

  • Mohammad Wais Sharif Zada

    (Hunan University)

Abstract

The environmental implications of foreign direct investment (FDI) have been extensively debated, yet, comparative evidence on how global FDI (GFDI) and China’s outward FDI (COFDI) distinctly shape green growth (GG), particularly within the strategically significant Belt and Road Initiative (BRI) economies, remains notably scarce. Therefore, this paper provides a comparative non-linear analysis of the impact of GFDI and COFDI on green growth (GG) in 103 BRI countries, using data from 2000 to 2022. Employing the Feasible Generalized Least Squares (FGLS) technique, we find that both GFDI and COFDI exert complex, non-linear, and significant U-shaped and N-shaped influences on GG. The robustness of these non-linear impacts is verified using the System-GMM method and by excluding observations associated with global shocks, including the 2008 financial crisis (2007–2009) and the COVID-19 pandemic (2019–2021). Additionally, cross-model comparison reveals that the marginal linear and non-linear effects of GFDI and COFDI on GG differ significantly across the selected BRI nations. Furthermore, mechanism analysis demonstrates that renewable energy (REN) and structural change (STCH) partially mediate the relationship within specific ranges of GFDI and COFDI values, where both the direct and indirect effects are nonzero. Based on these empirical non-linear findings, we discuss relevant policy recommendations.

Suggested Citation

  • Shah Mir Mowahed & Jingjing Yang & Mohammad Wais Sharif Zada, 2026. "Non-Linear Impact of Global FDI and Chinese OFDI on Green Growth in Belt and Road Economies: A Comparative Panel Data Analysis," East Asian Economic Review, Korea Institute for International Economic Policy, vol. 30(2), pages 245-294, June.
    • Handle: RePEc:ris:eaerev:023043
    DOI: 10.11644/KIEP.EAER.2026.30.2.466
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    Keywords

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    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F15 - International Economics - - Trade - - - Economic Integration
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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