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

Shah Mir Mowahed, Jingjing Yang and Mohammad Wais Sharif Zada
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Shah Mir Mowahed: Hunan University
Jingjing Yang: Hunan University
Mohammad Wais Sharif Zada: Hunan University

East Asian Economic Review, 2026, vol. 30, issue 2, 245-294

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.

Keywords: Green Growth; Global Foreign Direct Investment; Chinese Outward Foreign Investment; Belt and Road Initiative; Environmental Kuznets Curve (search for similar items in EconPapers)
JEL-codes: F15 F21 Q56 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ris:eaerev:023043

DOI: 10.11644/KIEP.EAER.2026.30.2.466

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