Emission Reduction and Foreign Direct Investment Nexus in China

Yuan Xu, Yanrui Wu and Yongli Shi
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Yuan Xu: Nanjing University of Economics and Finance
Yongli Shi: Nanjing University of Economics and Finance

No 21-07, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: This paper employs a difference-in-difference-in-difference approach to examine the emission reduction and foreign direct investment nexus in China. It combines a firm-level dataset with emission reduction target statistics at city-level. The findings indicate that stringent environmental regulation is associated with the fall of the output of foreign firms in general and the shrinking of pollution-intensive industries in cities with heavy emission reduction pressure in particular. It is also shown that the location choice of foreign investment changes as emission reduction targets at city-level vary. Finally it is found that environmental regulation helps improve the structure of foreign direct investment and hence contributes to industrial upgrading in the economy.

Keywords: Emission reduction; foreign direct investment; environmental regulation; DDD method; China (search for similar items in EconPapers)
Pages: 26
Date: 2021
New Economics Papers: this item is included in nep-cna, nep-ene and nep-env
Note: MD5 = 027a445dd09b6f372af76b1b7de2ba9a
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Citations: View citations in EconPapers (5)

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Journal Article: Emission reduction and foreign direct investment nexus in China (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:uwa:wpaper:21-07

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