The Impact of Foreign Direct Investment on Environmental Pollution in China: Corruption Matters

Shi Wang, Hua Wang and Qian Sun
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Shi Wang: School of Economics and Finance, Xi’an International Studies University, Xi’an 710128, China
Hua Wang: School of Foreign Studies, Xi’an Jiaotong University, Xi’an 710049, China
Qian Sun: School of Economics and Management, Southwest Petroleum University, Chengdu 610500, China

IJERPH, 2020, vol. 17, issue 18, 1-20

Abstract: This research investigates the interaction effect between corruption and foreign direct investment (FDI) on environmental pollution by applying the spatial econometric model to the panel data of China’s 29 provinces from 1994 to 2015 and analyzes the differences between China’s eastern, central and western regions. Results show that (a) FDI inflow deteriorates the environmental quality, validating the pollution haven hypothesis (PHH); (b) by weakening the environmental standards, corruption enables the inflow of low-quality FDI, weakens the spillover effect of FDI and indirectly causes further environmental pollution; (c) the interaction effect between corruption and FDI on environmental pollution is less significant in the eastern region than in the central and western regions.

Keywords: FDI; corruption; environmental pollution (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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