The Impact of Coordinated Development of Two-Way Foreign Direct Investment on Green Total Factor Productivity

Yong Tao ()
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Yong Tao: Wuhan University of Technology

A chapter in Proceedings of the 2025 10th International Conference on Financial Innovation and Economic Development (ICFIED 2025), 2025, pp 541-547 from Springer

Abstract: Abstract After in-depth analysis and comprehensive evaluation of existing studies on the impact of two-way foreign direct investment (FDI) and innovation-driven strategies on China’s green total factor productivity (GTFP), this study adopts the Slacks Based Measure (SBM) directional distance function model that includes global non-expected output. Under the strict constraint of variable returns to scale (VRS), the green Global Malmquist-Luenberger (GML) productivity index of provincial administrative units is analyzed in detail. On this basis, this study constructs an empirical modeling framework and integrates a series of key control variables to comprehensively explore the dynamic impact of two-way FDI on GTFP. The results show that the growth of IFDI has a significant inhibitory effect on GTFP, which to some extent provides empirical support for the applicability of the “polluted paradise” hypothesis in China; the expansion of OFDI and the synergistic effect of bidirectional FDI have a positive impact on the growth of GTFP; and OFDI and bidirectional FDI can be used to improve human capital level and then to enhance GTFP. The expansion of OFDI and the synergistic effect of two-way FDI have a positive impact on GTFP growth; OFDI and two-way FDI can contribute to the growth of green total factor productivity by enhancing human capital.

Keywords: Two-way FDI; Green Total Factor Productivity; Mediation Effect (search for similar items in EconPapers)
Date: 2025
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DOI: 10.2991/978-94-6463-702-1_57

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