Research On The Environmental Effects Of FDI In Chemical Industry In China

Chemical industry is the basic and supportive industry of national economy. Its production value accounts for ten percent of national total production value in china. It is also the important industry in China, which attract FDI. But meanwhile, chemical industry is pollution-intensive industry. The more FDI it attract, the more waste and residues it will generate. So it is necessary to research the environmental effects of FDI in Chemical industry in China.This paper use environmental externality theory and foreign direct investment theory, from the point of industrial level of FDI to investigate the environmental effects of FDI in Chemical industry in China. Firstly, analyze the actuality, trend and motivation of FDI in chemical industry and pollution situation of chemical industry. Secondly, research the relationship of chemical industry's FDI and its pollution under the framework which effects are differentiated into scale effects, structural effects, technological effects. Finally, establish a Linear Regression Model to estimate the environmental effects of FDI in chemical industry.The conclusion is that, the FDI in chemical industry is positive to its pollution, especially to exhaust emission and solid waste. As the FDI in chemical industry increase, the pollution in this industry increases too. It means that the total impact of FDI entry in chemical industry is negative to the environment. The scale effects and structural effects of FDI in chemical industry are bigger than technological effects. So the total environmental effects of FDI in chemical industry are detrimental. At the same time, the detrimental impact to the environment of domestic investment is larger than foreign direct investment in chemical industry.