Two-way foreign direct investment, science and technology manpower, and carbon total factor productivity: Empirical evidence from China's manufacturing industry

Xiuli Zhao, Xiaojie Gao, Xiangyi Feng and Yuhe Chen

International Review of Economics & Finance, 2025, vol. 97, issue C

Abstract: China's manufacturing industry has the most concentrated technological innovation and the most carbon dioxide emissions, and the improvement of carbon total factor productivity (CTFP) in the manufacturing industry is the key to promoting carbon peak and carbon neutrality in the process of realizing socialist modernization. This paper empirically examines the CTFP effect of two-way foreign direct investment (two-way FDI), the regulating effect of scientific and technological manpower on the impact of two-way FDI on CTFP, and the CTFP effect of the coordinated development of two-way FDI using the double-digit sub-industry data of China's manufacturing industry. The results show that two-way FDI can significantly improve the CTFP. However, because outward foreign direct investment (OFDI) has strong positive total factor productivity (TFP) effect and significant positive carbon emission reduction effect, inward foreign direct investment (IFDI) only has weak positive TFP effect and insignificant carbon emission reduction effect, so the positive promoting effect of OFDI on CTFP is greater than FDI. Moreover, the coordinated development of two-way FDI can significantly improve the CTFP, and the positive promoting effect is larger than the effect of two-way FDI alone. Finally, science and technology manpower have negative and positive regulatory effects on IFDI and OFDI on CTFP, respectively.

Keywords: Inward foreign direct investment; Outward foreign direct investment; Scientific and technological manpower; Carbon total factor productivity; Manufacturing industry (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:97:y:2025:i:c:s1059056024007342

DOI: 10.1016/j.iref.2024.103742

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