Environmental Regulation, Foreign Direct Investment, and Green Total Factor Productivity: An Empirical Test Based on Chinese City-Level Panel Data

Lei Chen, Lijun Hu, Fang He and Heqi Zhang ()
Additional contact information
Lei Chen: School of Business Administration, Zhongnan University of Economics and Law, Wuhan 430073, China
Lijun Hu: School of Business Administration, Zhongnan University of Economics and Law, Wuhan 430073, China
Fang He: School of Business Administration, Zhongnan University of Economics and Law, Wuhan 430073, China
Heqi Zhang: School of Business Administration, Zhongnan University of Economics and Law, Wuhan 430073, China

Sustainability, 2024, vol. 16, issue 13, 1-23

Abstract: Environmental regulation is a crucial tool for government intervention in the field of green technology innovation. It can boost an enterprise’s competitiveness and encourage green technology innovation, both of which have a major effect on luring foreign investment. This paper first systematically elaborates on the relationship between environmental regulation, foreign direct investment (FDI), and green total factor productivity (GTFP) and then combines panel data from Chinese cities to empirically test these relationships using various methods, such as the mediation effect model, two-stage least squares, and difference-in-differences method. The study found that environmental regulation significantly boosts FDI and GTFP. FDI helps to improve GTFP, and environmental regulation can impact GTFP indirectly through FDI. The way that FDI and environmental regulations affect GTFP demonstrates regional variation. Large cities with high economic growth gain more from environmental regulation. FDI has a stronger promotion effect on GTFP in medium- and small-sized cities than in large-sized cities, and it does not significantly impact GTFP in cities with high levels of economic development or in the eastern region.

Keywords: environmental regulation; green technology innovation; foreign direct investment; green total factor productivity (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2071-1050/16/13/5620/pdf (application/pdf)
https://www.mdpi.com/2071-1050/16/13/5620/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:16:y:2024:i:13:p:5620-:d:1426376

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().