Effect Of The Foreign Direct Investment On The Environmental Pollution In The Yangtze River Delta

As the acceleration of the economic globalization and the deepening of China's socialism market economic reform, more and more world-famous Transnational corporations begin to investment to China. The scale of China's foreign investment has rapidly enlarged. Foreign direct investment (FDI) is a "double-edged sword". On one hand, it offers funds for our economic development. But on the other hand, it also damages the environment. The relationship between FDI and the environment has been a hot international issue .The relationship between FDI and the environment is very complex. Firstly, the waste from foreign-invested enterprises damages the environment directly. Secondly, FDI can also make damage to our environment through a lot of other indirect ways, including scale effect, structure effect, technical effect, and so on. These effect goes in different directions, so the overall impact is uncertain.In this paper, on the basis of the former, I select the Yangtze River Delta for the object, use both theoretical and empirical method to study the relationship between FDI and the environment in that area. First, I tested the EKC hypothesis on the Industrial "three wastes"-industrial wastewater emissions, industrial gas waste emissions and industrial solid waste production. Second, by using the panel data analysis of single-equation model, I studied the impact of FDI on the industrial waste water emissions of the Yangtze River Delta. At last, I used the simultaneous model to analysis the complex effect of FDI on the environment by breaking the total effect into scale effect, structure effect, and technical effect.As the result, the test of the EKC hypothesis on gas waste emissions and industrial solid waste production show a linear relationship between the waste emission and the per capita GDP. Different from the above, there is an inverted "U" shaped curve relationship between the industrial waste water emissions and the per capita. In the single equation model analysis, FDI had a positive effect on the environment, and the results also showed that the "pollution haven" hypothesis did not exist in the Yangtze River Delta. The simultaneous equations model got similar conclusions as the single-equation model.