FDI, Environmental Pollution And Environmental Regulation

Under the background of sustained economic growth,the importance of FDI in China continue to growing.It is embodies not only in the improvement of foreign capital in actual use,but also in the important role of foreign investment enterprises.However,China's environmental pollution problems become increasingly serious.It has become a hot issue since the 11 th Five-Year to the 12 th Five-Year.At present,China's overall environmental situation is serious.And,the pollutant source is highly concentrated.In addition,the implementation and supervision of the environmental regulation,and enterprise environment regulation is also imperfect.Under the background of the relevant academic research,the liberalization of trade and environment of the debate has received the attention in the world,?pollution haven hypothesis? is still uncertain,and how environmental regulations affect FDI related academic research needs further development.This paper deeply investigates how the FDI effects the environmental pollution,and the relationship between environmental regulation and FDI through the theoretical and empirical study.Moreover,try to find the answer of why there are differentiation in empirical research conclusion,whether and how the FDI inflows influence China's environmental pollution condition,what's the effect of China's environmental regulation on FDI's location choice.In the aspect of theoretical research,this paper mainly discusses the development direction of theory analysis on the relationship between FDI,environment pollution and environmental regulation.The fourth part in this paper focuses on the mathematical model of how FDI affects the environmental pollution,and how environmental regulations affect FDI's location choice.What's more,this paper expands the theoretical analysis,and calculates the equilibrium results of theoretical model in order to predict possible effect.In the aspect of empirical study,this paper mainly discusses the following questions.First,there is always a big discussion on whether the influence of FDI on China's environment is positive or negative,as well as the conflictive conclusion of empirical studies.Why the situation above appeared? The third part of the paper is going to solve this problem,by using Meta regression method.Second,whether and how the FDI inflows influences China's environmental pollution condition? The problem will be discussed in the fifth section of the paper,by using the city panel data.Using the instruments,and the two-stage least squares method,we tested the causality between FDI and environment pollution;more detailed studies on how FDI affects the environment pollution emissions from the various aspects of regional,factor endowment,population density,the heterogeneity of human capital,industrial structure,etc;Also we studied the mechanism of FDI influence environmental pollution discharge conditions for further study.Third,how the development of China's environmental regulation system construction change effects FDI location choice? The sixth part of the paper in order to solve this problem from the angle of regional environmental regulation difference,by using of national policy named ?quantitative assessment for comprehensive renovation of urban environment?.Focusing on enterprise level data of China's state monitored enterprises,this paper analyzed how the policy influences the industrial added value of foreign-invested enterprises,in order to find more evidence of the ?pollution haven hypothesis? in China.In this paper,there are following parts that expatiate on the above research questions by using qualitative and quantitative,theoretical research and empirical research combined analysis method.In the first part includes the introduction,the main thesis research background,research value and significance,research contents,ideas and methods,possible innovation and deficiency.In the second part,the paper carried on the literature review from the aspect of theoretical and empirical research,with emphasis on the analysis of the deficiencies and controversy between domestic and foreign research results.Theoretical literature review includes main contribution of Environmental Kuznets Curve,the main contribution of the research progress of trade liberalization and the environment,explanation on theory of how environmental regulations affect FDI.The empirical literature review mainly includes: important literature of testing the relationship between economy and environment,literature review of the study on environmental effect and environmental regulation effect of literature,the latest progress in the firm-level study.In the third part,this paper used the Meta regression method to carry on the quantitative analysis of empirical literature on how FDI affect China's environmental pollution.In order to explain the phenomenon of differentiation conclusion on environmental effect of FDI.Respectively,this paper study the basic model of Meta regression analysis,statistics of sample literatures,selection and meaning of main variables,regression analysis of the general characteristics and decomposition characteristics,study on degree and direction of environmental effects on FDI and publication bias problem.In the fourth part,the paper mainly expatiates on the theoretical model of FDI,environmental pollution and environmental regulation,and expand the model,in order to provide adequate theoretical basis.General equilibrium analysis of FDI and environment pollution mainly include production technology,the equilibrium output and pollution level,the environmental effect of economic growth.Environmental effect of FDI is mainly divided into the scale effect,technology effect,structure effect and the effects of environmental regulation and competition between local governments.Pollution haven hypothesis and the hypothesis of factor endowments theory.The reference of Dunning OIL theory.Expansion of analysis on endogenous and exogenous environment regulation influence of FDI location.Innovation point of this part is mainly on the environmental effect of FDI on the analysis of the development,and the expanding analysis of how environmental regulation influence the FDI location choice.In the fifth part,the paper firstly the FDI influence basic environmental pollution situation in China,including the present situation of FDI and China's environmental pollution,and FDI regional distribution of different pollution level in China.Followed by using the panel data of Chinese cities,by constructing instrumental variable of coastal geographical distance and its GDP growth rate of FDI main sources,using the two-stage least square method,the causality between FDI and environment pollution.And from regional,factor endowment,population density,the heterogeneity of human capital,industrial structure,etc and discusses the different effects of FDI on the environment pollution emissions.Finally,through the mechanism research on how FDI influence environmental pollution,the paper study the causal relationship between them further.The study found that FDI and China's environmental pollution condition exists negative causal relationship,namely the FDI significantly alleviate the environmental problem in China.In the sixth part,the paper studied another major research theme of how China's environmental regulation influence FDI.In this part firstly described detailed vicissitude on the development of China's environmental regulation system.Secondly,according to China's ministry of environmental protection the execution of national ?quantitative assessment on comprehensive renovation of urban environment? policy,through the adoption of e difference-in-difference method,we studied the policy impact on China's actual use of foreign capital level effect.Again,at the firm level,the monitored exhaust gas pollution and waste water pollution source enterprise policy,is the likely have no effect on foreign investment enterprises.In the seventh part,we illustrated the conclusion of full text.According to the conclusion,we proposed some targeted policies and suggestions.Through detailed analysis of the above seven parts,in this paper,the main contributions are the followings:First,we expand FDI environment effect theory.Using the general equilibrium analysis method,the trade liberalization impact on environmental pollution effect(which can be decomposed into scale effect,structure effect and technology effect)is introduced into the the framework of FDI and environmental pollution.From the aspect of theoretical research,we studied the FDI's influence mechanisms of environmental pollution,and expanded the theory of FDI environmental effects.THE influence mechanism of FDI environmental effects is expanded as: scale effect,structure effect,technological effect and environmental regulation effect and the local government competition effect.Second,the paper did the expansion analysis of the environmental regulation effect on FDI's location choice.Based on ?pollution haven hypothesis? theory and Dunning OIL theory international production,we combined the national location advantage with the environmental regulation factors,and further expatiates how the environmental influence the FDI location choice under endogenous and exogenous conditions respectively.Third,through Meta analysis of empirical research on the China's FDI environmental,we found that according to the level and time is involved in 2006 and later years,is one of the important cause.The measurement methods did not significantly affect the outcome.Variables closely related to the FDI on research and development such as industrial structure is also the important factor causing the difference empirical results.We also found publication bias in the empirical research.And,if we ignore the factor endowments and environmental regulation,it will lead to the function of FDI environmental effects to be underestimated.Fourth,the paper has made a certain contribution to research on the causality between FDI and environment pollution.By using reasonable instruments with two variables,namely prefecture nearest port geographic distance and the of the GDP growth rate of the main sources of FDI.We found than FDI and environment pollution is verified causal relationship exists between the negative.And we further studied the causal relationship from heterogeneity and influence mechanism.Fifth,based on empirical analysis of the national policy of ?city assessment? effect on FDI,we found that participating in the national policy of ?city assessment? will cause the FDI in actual use down,compared with other cities.Sixth,based on China's environmental regulation on enterprise level,we matched firm-level data conducted by the National Bureau of Statistic with China national key monitoring enterprise,in order to evaluate the influence of the national key monitoring policy to foreign investment enterprises.This article mainly from the perspective of industrial added value of enterprises with foreign investment,using the monitored as the experimental group of enterprises with foreign investment and other enterprises with foreign investment as the control group,by using tended to score matching method,calculated the monitored policy on foreign investment enterprises to produce the average treatment effect.The study found that monitored corporate policy don't have a significant effect on foreign investment enterprises.Based on the above research content and the main contribution,research conclusion of this paper is mainly as followings:First,in this paper,by using Meta regression analysis method,in distinct conclusion of the empirical research on Chinas FDI environmental effect is verified.The results showed that: the data level is the important reason for the direction of China's FDI environment effect;the measures did not produce significant effect;Factors closely related to FDI's location choice is also important;region partition method as the eastern,central and western,didn't decompose the regional heterogeneity;Environmental regulation of the control variables should not be ignored in the empirical research.In addition,we found that FDI environmental effects in the empirical research has significant publication bias phenomenon.Second,by building a reasonable instrumental variable and using of panel data of urban city,we found that the FDI has significant effect to reduce China environmental pollution emissions.This is due to undertake FDI in the developed countries have a wealth of the host country effect on China,particularly in the application of clean production technology,the spread of the advanced enterprise management concept,etc.Through clean technology promotion and the increase of the cognition of international environmental standards,are likely to reduce the production of environmental pollutant emissions,and thus reduce China's worsening environment.In addition,the general method of the empirical results show that whether the FDI variable coefficient estimate is a positive or negative,is severely underestimated the influence of FDI environmental effects.Third,we found that more detailed geographic division can better reflect and explain the regional heterogeneity of FDI environmental effects;Due to the natural environment and climate conditions in north China does not use the spread of pollutants,the role of FDI on the environment into negative;Industrial structure,population density and urban green area of heterogeneous can lead to significant difference of FDI environmental effects,and the capital did not lead to obvious differences in the level of population;In labor intensive,lower second industry,the population is relatively scarce or urban greening more perfect,there are more influence degree by FDI environmental abatement effect.Fourth,in the mechanism study of FDI effect on environment pollution,we have following research conclusions: the influence of FDI on the environment pollution situation is closely related to its cause of scale effect,structure effect,technological effect and environmental regulation effect and competition between the local governments.The reasons for the above phenomenon can be summed up as: first,the innovation of production technology,the application of clean technology is the driving force of pollutant emissions;Second,the local government can quickly and effectively to respond according to changes of environment standard,also be the important mechanism of FDI to alleviate environmental pollution status;Finally,the existing holes in Chinas' s environmental regulatory system will weaken FDI environmental effect.Fifth,in 2007,the national policy named ?quantitative assessment of comprehensive renovation of urban environment?,produced significant inhibitory effect on the China's actual use of foreign capita.Compared to cities that don't participate in national ?city assessment?,the actual use of foreign capital in key environmental protection cities reduce about 14.5%.On the one hand,the city of examination in order to complete the assignment,meet environmental standards,and ultimately through the national ?city assessment?,is likely to take including strengthen the monitoring and control the scale of production and raise the standards of the investment,and produce a certain limit function on foreign companies' enter and production activities;On the other hand,due to environmental regulation,the FDI investors need to invest more in pollution control elements,and increase investment cost,it probably causes of the FDI investors reduce investment or change direction.Sixth,in this paper,by using cross-section data of 2007 enterprises level,we found that ?national monitoring enterprise? policy did not have a significant impact on foreign investment enterprises.First,the foreign investment enterprise is not monitored the main object.Second,more than 80% of companies have been monitored for domestic enterprises,to a certain extent,it can explain as the pollution level of domestic enterprises is higher than foreign investment enterprises.Third,monitored corporate policy in the implementation stage and monitoring information released exist certain flaws.Fourth,negative even false report of the enterprise's monitoring information,may result in an inaccurate and ineffective evaluation of the policy.To sum up,this paper argues that FDI has produced a positive effect to China's environmental pollution.And,under different circumstances,degree of the influence is heterogeneous.Although the influence of FDI on China's environment is positive,but when China's environmental regulation is more constrictive,the FDI inflow will drop due to the government's environmental pressure and the improvement of investment costs.From the methodology level,this article only uses the index of industrial so2 as the measurement of environmental pollution level.FDI surely has a significant reduction effect on industrial so2 emissions,but for other pollutants emissions may not produce a positive role.Also,this paper's conclusion of how environmental regulation effects FDI is based on the comparison between major environmental protection cities and others.From the practical level,since the government of the city is unable to accurately measure and distinguish whether the FDI inflow is positive or not,in order to pass the national assessment,they will execute the same restrictions for all enterprises which will cause the output of foreign investment enterprises cut down.For investors,the will reduce the investment or change the direction of investment,as the cost of investment is highly increased.Based on the above research conclusion,this paper puts forward several policy.Suggestions as follows.In the actual use of FDI stages,the reduction effect of FDI should be fully and effectively utilize.Environmental protection and other relevant departments should pay more attention to the central and western regions.To promote the function of local government investment policies and environmental develop coordinately.To realize the diversification of environmental policy tool type.Promote the legislative construction of environmental protection tax.To perfect the environmental information published and query system.Improve the unity and standardization of local environmental protection agencies.Perfect the construction of urban environmental protection facilities,etc.