The Empirical Analysis On The FDI's Impact On The Environment In The Delta Of Pearl River

In the last several decades, foreign direct investment (FDI) has greatly contributed to the economic development of our country and the enhancement of people's living standard. As the frontier of the opening up and reform, the Pearl River Delta has attracted a large amount of FDI which brings advanced technology, equipment and managerial expertise and promotes the region's economic growth as a result. However, with the economic growth, the environmental quality suffers. The accumulation of waste emission results in an increased level of pollution. Then, does a close relationship between the environmental change and the inflow of FDI exist? If it does, what is its nature? The answer to these urgent questions becomes the key to the improvement of FDI quality and the achievement of a sustainable development of the region.This thesis focuses on the FDI environmental effects in the Pearl River Delta. The thesis firstly sorts out the current research results of FDI,economic growth and environmental quality. The thesis then conducts a statistical analysis on the status and characteristics of the FDI in the region and elaborates on the environmental pollution situation of the region. Following a brief introduction of 3SLS, the thesis finally establishes a simultaneous equations model to conduct an empirical research on the relationship between FDI and environment of the region in a systematic way.The empirical research shows that, in general, FDI imposed a negative influence on the ecological environment of the Pearl River Delta. The direct effect imposed by FDI on environmental quality was positive but not obvious. The scale effect imposed by FDI was negative. Whenever the inflow of FDI increased by 1%, the waste emission increased by 0.097%. The structural effect imposed by FDI was conducive to the improvement of environmental status of the region but not obviously enough to offset the negative influence brought by the scale effect. The technical effect imposed by FDI was not positive as forecasted by the related theory. One of the reasons is that FDI did not play a significant role in promoting the technological advancement of the host country. Besides, the reinforcement of environmental regulation in the region didn't check the inflow of FDI. The phenomenon is mainly caused by the fact that foreign investors pay more attention to the extensive market and cheap labor of the region.