Nonlinear Effects of Urbanization and Outward Foreign Direct Investment on Carbon Emissions in China

Ming Yi, Mengqi Gong, Ting Wu and Yue Wang
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Ming Yi: Research Center of Resource and Environmental Economics, China University of Geosciences, Wuhan 430074, China
Mengqi Gong: School of Economics, Huazhong University of Science & Technology, Wuhan 430074, China
Ting Wu: Research Center of Resource and Environmental Economics, China University of Geosciences, Wuhan 430074, China
Yue Wang: Department of Urban Planning and Design, The University of Hong Kong, Hong Kong SAR 999077, China

Sustainability, 2018, vol. 10, issue 12, 1-11

Abstract: It is essential to explore the relationship between China’s urbanization, outward foreign direct investment, and carbon emissions, in order to better understand China’s carbon emissions reduction target. To this end, the nonlinear Granger causality test and Markov-switching model are applied to analyze the structural effects of urbanization and outward foreign direct investment on domestic emissions, on the basis of time series data from 1984–2016. The results show that the promotion effect of outward foreign direct investment on carbon emissions is increased from low-carbon regime to high-emission regime. Specifically, 1% increase in OFDI leads to a rise in carbon emissions by 0.064% and 0.112% under the former and latter regime respectively. Unlike the effect trend of outward foreign direct investment, the effect of urbanization on carbon emissions is decreased from a high-emission regime (5.221% rise in carbon emissions with 1% increase in the level of urbanization) to a low-carbon regime (3.133% rise in carbon emissions with 1% increase in the level of urbanization).

Keywords: urbanization; outward foreign direct investment; carbon emissions; nonlinearity (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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