Growth, Foreign Direct Investment and the Environment: Evidence From Chinese Cities
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 two industrial water pollution indicators (wastewater 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 output of domestic and foreign owned firms increases several pollutants in a statistically significant manner while output of firms from Hong Kong, Macao and Taiwan either reduces pollution or is statistically insignificant.
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