Does outward foreign direct investment improve environmental quality in home country?——Evidence from Chinese firms’ water pollution emissions

This paper empirically examine the causal effect and mechanisms of China's outward foreign direct investment (OFDI) on pollution emissions. Employing the difference-in-differences (DID) alongside various heterogeneity robust estimation methods based on a series of firm-level data, our findings indicate that OFDI significantly reduces firms' chemical oxygen demand (COD) emissions. Moreover, it increases total output while reducing COD emission intensity. The mechanism analysis suggests that firms primarily attain emission reductions through reverse technology spillovers stemming from OFDI in host countries with more stringent environmental regulations. Additionally, such reductions are facilitated by improvements along both the intensive and extensive margins of exports.

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Publication Details

Journal
China Economic Quarterly International
Published
2024-12-24
DOI
https://doi.org/10.1016/j.ceqi.2024.12.003
Citations
3
Primary Topic
Energy, Environment, Economic Growth
Type
article
Field-Weighted Citation Impact
3.39
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article

Does outward foreign direct investment improve environmental quality in home country?——Evidence from Chinese firms’ water pollution emissions

Suhua Tian, Qin Xiong
3 citations
China Economic Quarterly International
Energy, Environment, Economic Growth
3.39
article

Does outward foreign direct investment improve environmental quality in home country?——Evidence from Chinese firms’ water pollution emissions

Suhua Tian, Qin Xiong
article en
3 citations

Abstract

This paper empirically examine the causal effect and mechanisms of China's outward foreign direct investment (OFDI) on pollution emissions. Employing the difference-in-differences (DID) alongside various heterogeneity robust estimation methods based on a series of firm-level data, our findings indicate that OFDI significantly reduces firms' chemical oxygen demand (COD) emissions. Moreover, it increases total output while reducing COD emission intensity. The mechanism analysis suggests that firms primarily attain emission reductions through reverse technology spillovers stemming from OFDI in host countries with more stringent environmental regulations. Additionally, such reductions are facilitated by improvements along both the intensive and extensive margins of exports.

China Economic Quarterly InternationalVol. 5(1)
Nanjing Tech University (CN), Institute of World Economy and Information (RU), Institute of World Economy and International Relations (RU)
Openalex Percentile: Top 6%
Energy, Environment, Economic Growth
3.39
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