An anatomy of China’s eco-efficiency gains: the role of FDI

Chia-Hui Lu and Yu Pang

Asia-Pacific Journal of Accounting & Economics, 2017, vol. 24, issue 1-2, 106-126

Abstract: This paper quantifies the role of FDI in the remarkable fivefold gains in eco-efficiency in China’s manufacturing during the period 1995–2006. We refine the conventional index decomposition method and apply it to China’s SO2$ \mathrm{SO}_2 $ emission. We find that (i) foreign-invested enterprises (FIEs) have shifted production toward cleaner industries; (ii) the better abatement technique of FIEs explains 23% of the eco-efficiency gains; and (iii) another 69% of the eco-efficiency gains come from by progress in domestic firms’ abatement technique, which is associated with forward environmental spillovers from FIEs. Findings (ii) and (iii) lend support to the so-called Pollution Halo Hypothesis.

Date: 2017
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DOI: 10.1080/16081625.2015.1062244

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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