Do Foreign Direct Investment Firms Have Higher Environmental Efficiency?

The environment of China has been deteriorating with the rapid economic growth for a long time.And now our country cares more about the coordinated development of economy and environment.As one of the main engines of economic growth,what is the effect of foreign direct investment on the environment? How to balance the effect of foreign direct investment on our economy and environment? What should we pay more attention to when introducing foreign direct investment? This is related to the sustainable development of our country.Based on two-stage RAM Network DEA model,this paper divides the whole production into production progress and management progress,calculates the environmental efficiency of the firms in Dongguan during 2003 to 2007,and then does empirical analysis on whether FDI firms have higher environmental efficiency.Our study shows that FDI firms have higher environmental efficiency owing to higher management efficiency while the production efficiency is not significantly different from that of domestic firms.The results indicate that FDI firms don't employ more advanced production technology in the production progress.On the contrary,in order to pursue the cost advantage they mainly do extensive production with our cheap resource and then strengthen pollution abatement to meet the environmental standard.Further research suggests that the difference between domestic firms and FDI firms in efficiency is caused mainly by solely foreign-owned enterprises and FDI firms from Hong Kong,Macau and Taiwan.The efficiency of Chinese-foreign joint ventures is not significantly different from that of domestic firms.And the efficiency of FDI firms from developed countries is just slightly different from that of domestic firms.It is suggested that we value the quality of foreign direct investment,guide the healthier development of foreign direct investment,establish more Chinese-foreign joint ventures relative to solely foreign-owned enterprises,introduce more capital from developed countries relative to Hong Kong,Macau and Taiwan.