An Empirical Study on the Technical Efficiency of Foreign Direct Investment in China with Environmental Constraints

Jia-Ting Wang, Qing-Feng Cao, Tian-Ye Chen and Xuan Wang

Chinese Economy, 2016, vol. 49, issue 2, 94-104

Abstract: This article uses a slacks-based measure (SBM) model to evaluate the technical efficiency of foreign direct investment (FDI) in China’s thirty provinces with environmental constraints. Meanwhile, this article also employs the Charnes-Cooper-Rhodes (CCR) model to measure the technical efficiency of FDI without environmental constraints. By comparing these two results under different assumptions, we find the technical efficiency with environmental constraints in most provinces is lower than that without environmental constraints. In terms of technical efficiency, Central China is the highest, Eastern China comes second, and Western China is the lowest in both cases. Besides, the excess pollutant emission is the primary factor that results in the technical inefficiency of FDI.

Date: 2016
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DOI: 10.1080/10971475.2016.1143304

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