The Impact Of Environmental Regulation On China's OfDI

In recent years,with the continuous promotion of the construction of ecological civilization in China,the intensity of domestic environmental regulation continues to improve.How to achieve a win-win situation for ecological environment protection and economic development is a major topic of China's high-quality development.While the intensity of domestic environmental regulation continues to improve,as an important part of the new pattern of comprehensive opening up,China's outward foreign direct investment(OFDI)have been growing steadily and continuously,and play an important role in the process of economic structural adjustment and high-quality economic development in China.Meanwhile,the relationship between environmental regulation and transnational investment has always been one of the most controversial topics in the field of international trade and investment.The Pollution Haven Hypothesis holds that the differences in the intensity of environmental regulation among countries will promote the transnational transfer of pollution industries.Thus,does the continuous increase in the intensity of China's environmental regulations promote the development of China's OFDI? If so,what is the promotion mechanism? Is it based on the consideration of avoiding rising domestic costs? Or based on other factors such as Porter Hypothesis? The exploration of this problem not only makes up for the deficiency in the research field of China's OFDI motivation,but also can provide new ideas for the implementation of the new development concept of “innovation,coordination,green,openness and sharing” in China,as well as the coordinated development of high quality development,ecological civilization construction and comprehensive opening of the new pattern.Firstly,based on a detailed review and absorption of previous studies,combining with the development of environmental regulation and OFDI in China,this thesis expounds the mechanism of the impact of home country's environmental regulation on foreign direct investment from both macro and micro perspectives.Secondly,a new indicator system for environmental regulation in China is constructed and calculated.Finally,based on the provincial level data and micro-enterprise data of China respectively,the impact of environmental regulation on China's foreign direct investment is empirically analyzed by using some measurement methods,such as fixed effect regression,tool variable method,Probit regression,negative binomial regression,etc.This thesis consists of eight chapters.The first chapter is the introduction,which mainly introduces the research background and significance,the definition of related concepts,research framework and methods,as well as innovation points.The second chapter is the research review.The third chapter is about the development of China's environmental regulation and OFDI.The fourth chapter is the mechanism analysis of the impact of home country environmental regulation on foreign direct investment.The fifth chapter is the construction and measurement of the comprehensive indicator system of environmental regulations in China,including the comprehensive indicators of provincial environmental regulations and the comprehensive indicators of industrial industry environmental regulations.The sixth chapter is an empirical study at the provincial level,focusing on the impact of environmental regulation on the OFDI of provinces(regions,cities)and the existence of the Porter Hypothesis at the provincial level.The seventh chapter is an empirical study at the enterprise level,focusing on the impact of environmental regulation on the decision-making of OFDI,the impact mechanism and related heterogeneity effects.The eighth chapter is the conclusion,the policy enlightenment and the research prospect.The innovation of this thesis is embodied in the following aspects.First,the innovation of research perspective.The existing literatures,both the research on the motivation of China's OFDI and the relationship between environmental regulation and China's OFDI,have rarely been carried out from the perspective of the home country's environmental regulation.Based on the perspective of home country environmental regulation,this thesis studies its impact on China's OFDI,which is a useful supplement to existing research.Second,the innovation of indicator construction.Based on the evolution of the connotation of environmental regulation,this thesis constructs a comprehensive indicator system of environmental regulation at the provincial level,which includes four dimensions of environmental regulation: government-led regulation,market-led regulation,public-led regulation and regulation efficiency.This may be the first study to construct an indicator system of environmental regulation from this perspective.Third,the innovation of mechanism.In analyzing the mechanism of environmental regulation affecting OFDI,this thesis combines the Pollution Haven Hypothesis with Porter Hypothesis,and puts forward the concept of “Weak Pollution Haven Hypothesis”,which is also relatively rare in previous studies.This thesis draws the following conclusions:Firstly,through the mechanism analysis,it is found that the influence of home country environmental regulation on OFDI is multiple;the promotion effect of home country environmental regulation on OFDI does not fully conform to the classic Pollution Haven Hypothesis,that is,the enhancement of home country environmental regulations does not necessarily cause domestic companies to shift production to countries with loose environmental regulations.Secondly,through the construction and calculation of the comprehensive indicator of environmental regulation,it is found that the intensity of environmental regulation at the provincial level is on the rise,and the regional differences are significant,from strong to weak,it is eastern,central,and western.China's environmental regulation was initially dominated by government-led regulation,which now has gradually evolved into a situation in which government-led regulation,market-led regulation and publicled regulation are diversified regulated.The intensity of environmental regulation in industrial industry is positively related to the intensity of pollution,and the average intensity of environmental regulation in severe pollution industry is much higher than that in moderate and mild pollution industry.Thirdly,through the empirical research at the provincial level,it is found that the impact of environmental regulation on the outward direct investment of Chinese provinces(regions,cities)shows a significant inverted “U” relationship;Environmental regulation plays a significant role in promoting OFDI in the east regions and west regions,while it has no obvious effect in the central region.The impact of market-led environmental regulation on China's OFDI is significant,while the impact of government-led regulation and public-led regulation on OFDI is not significant.The Porter Hypothesis effect of environmental regulation affecting OFDI is mainly reflected in the eastern region,while the central and western regions are not obvious.Fourthly,through the empirical research on the enterprise level,it is found that domestic environmental regulation has the promoting effect of China's OFDI.The promotion effect of foreign direct investment is mainly caused by regional environmental regulation,and the investment promotion effect of industrial environmental regulation is not obvious.The realization mechanism of the promotion effect of OFDI includes the production cost transmission mechanism and the technology innovation transmission mechanism,in which the latter one is mainly reflected in the heavy pollution industry enterprises and the eastern region enterprises,that is,the Porter Hypothesis was confirmed in enterprises of some regions and industries.Compared with the medium and light pollution industries,the foreign investment decisions of the enterprises in the heavy pollution industries are more sensitive to environmental regulations.Environmental regulation has a significant impact on OFDI of enterprises in the eastern regions and western regions,but not in the central region.The foreign investment promotion effect of environmental regulation is not significant for state-owned enterprises,but significant for non-state-owned enterprises.The enhancement of domestic environmental regulation can enhance the probability of foreign direct investment of trade service investment type enterprises,production and manufacturing investment type enterprises and diversified investment type enterprises,without affecting the resources development investment type.The financing constraint has obvious moderating effect on the foreign investment promotion effect of environmental regulation,and the smaller the financing constraint,the greater the foreign investment promotion effect of environmental regulation it has.Combined with the conclusions of the study,this thesis puts forward the following policy recommendations: First,scientifically improve the level of environmental regulation in China and give full play to the technological innovation effect of environmental regulation;second,strengthen the intensity of industrial environmental regulation to make local regulation and industrial regulation work together;third,continuously improve the level of investment facilitation to help enterprises go out smoothly;fourth,taking market-led environmental regulation as a breakthrough point,continuously improve China's diversified environmental regulatory system;fifth,moderately increase domestic enterprises' financing support for foreign investment.