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

Yafei Wang, Meng Liao, Yafei Wang, Arunima Malik and Lixiao Xu
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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
Lixiao Xu: Institute of National Accounts, Beijing Normal University, Beijing 100875, China

Sustainability, 2019, vol. 11, issue 8, 1-24

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.

Keywords: two-way FDI; carbon emissions; inward foreign direct investment; outward foreign direct investment (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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