The Influence Of FDI On Environment Pollution Of Host Countires

Globalization developed the whole world economy integration, which affect the mode of production and consumption. Also, it made the problem of policy inner one country more complicated, like the problem of environment pollution. With the development of total amount of FDI in the whole world, people paid more attention on the environmental problem. Now China is one of the most FDI inflow countries in the world. Is the environmental effect of FDI positive or negative?From now on, there is no conclusion on it. On one side, like the famous "pollution heaven" indicated that, multinational enterprises transferred the pollution production chain into developing countries, which is forbidden in home countries. On the other side, some people thought they are positive to the environment, because they can transfer the clean technology and the management into host countries. This problem is very important to our country Sustainable development.So we develop the theory and use data of China to test it. To analysis it, we discuses it from there aspects:The first part analyzes the kind of FDI in host country was dense pollution industry or not. This part analyzes it with the theory of FDI and trade and use the Chinese data of 1995 and 2006 to test it. From this decade, we can conclude that FDI concentrate on heave pollution industry at first, but it began to transfer into light pollution industry.The second part analyzes the environmental performance of multinational companies and local ones to see which ones are better. This part analyzes the environmental performance of MNEs with a mathematical model of vertical product differentiation and tests it with an econometric model which used the data of Tianjin Economic-Technological Development Area convinced most of the propositions. The results indicate that because of the effect of scale and the host country, most Multinational Corporations'environmental performance is better than the local ones'.The third part analyzes the environmental effect of FDI from the macroeconomics. And then with the econometric method it tests the unique environmental effect of FDI. According to the theory on trade and pollution, this part concluded that there are four effects of FDI on host countries, which are scale effect, composition effect, technology effect and the environment regulation effect. FDI would affect host countries on technology spillover and capital accumulation. Through them FDI affect the four effects. Consequently, in the econometric method it should considered all of the effects to estimate it exactly. It used the panel data of Chinese province from 1992 to 2008. in indicated that:firstly, FDI would increase the pollution emission, make the environment even worse. FDI increases the capital accumulation, which enlarge the economy scale and make industry structure more badly. FDI also developed technology, which decreased the emission intensity. The effect of emission intensity cannot counteract the effects of scale and composition. So, FDI would increase the pollution emission. But, we should pay attention on the total environmental effect of FDI, which included the local enterprises pollution emission. So, we estimated it again, some of the direct effects of FDI are positive, some are negative. The indirected effects are all positive, which means that local enterprises increase the pollution.All in all, we concluded that FDI would concentrated in light pollution industry, and they perform better in environmental management than local ones. With the result of macro aspect, although FDI would increase the pollution emission, it is because of the development of local ones. So according to the results, we suggested that the government should pay more attention on regulation on local enterprises, FDI guide catalog, industry structure and technology research and development.