The Impact Of Environmental Regulation And OFDI On China's Technological Innovation

Innovation is the first driving force leading economic development.The Fifth Plenary Session of the Eighteenth Central Committee of the Communist Party of China calls for the implementation of the concept of innovative development,and puts forward that innovation should be placed at the core of the overall situation of national development.Innovation is the driving force for the realization of sustainable economic development and upgrading of industrial structure in China.Technological innovation is an important part of innovation.At present,China has made great progress in technological innovation of various fields,but there is still a gap compared with developed countries.How to further improve the level of technological innovation is a major issue worth discussing.Along with the rapid growth of China's economy,the massive consumption of natural resources and energy has brought serious environmental pollution problems.The increase of waste water,waste gas and solid waste has seriously damaged people's lives.Therefore,the government has adopted different types of environmental regulation policies in order to avoid further deterioration of the ecological environment.Under the new situation,in order to make use of foreign resources to develop domestic enterprises,the Chinese government has put forward the"going out" strategy,and more and more Chinese enterprises have carried out outward foreign direct investment activities.Under the circumstance that environmental regulation measures are becoming more stringent and the scale of China's foreign direct investment is gradually expanding,it is of great significance to study the relationship between environmental regulation,outward foreign direct investment and technological innovation in China.Firstly,this paper reviews the relevant literatures of domestic and foreign scholars on the relationship between environmental regulation,OFDI and technological innovation.The results show that most scholars support the "Porter hypothesis" that environmental regulation can promote technological innovation.At the same time,technology-seeking OFDI has been widely supported in promoting technological innovation.On the basis of previous research,this paper supplements and analyzes the relationship between OFDI with other motives and technological innovation,and discusses the role of environmental regulation in the process of OFDI promoting technological innovation.Then the thesis introduces the relevant theories of technological innovation,environmental regulation and outward foreign direct investment,Firstly,the paper analyzes the mechanism that environmental regulation to raise the cost of enterprises,squeeze R&D funds of enterprises,which will affect technological innovation.Secondly,it introduces the process of outward foreign direct investment with different motives to promote technological innovation of enterprises.Finally,the channels of environmental regulation influencing OFDI's technological innovation effect are explained.Using panel data of 30 provincial administrative units in China from 2004 to 2016,this paper constructs regression models including environmental regulation,outward foreign direct investment and their multiplying terms.The regression results show that there is a U-shaped relationship between environmental regulation and technological innovation,and outward foreign direct investment significantly promotes technology.Innovation,environmental regulation and OFDI technology innovation effect show a U-shaped relationship,which verifies the hypothesis of this paper.The results of robustness test prove that the research conclusion is reliable.Sub-regional empirical test shows that the regression results of the eastern region are consistent with the national sample.The regression results of the central and western regions show that the relationship between environmental regulation and OFDI technology innovation effect is not significant.Based on the research results of this paper,some policy recommendations are put forward.Firstly,the government should adopt flexible environmental regulation policies,explore the assessment of local government environmental protection indicators,and improve the level of environmental regulation.Secondly.China should maintain the growth rate of outward foreign direct investment,expand the scale of outward foreign direct investment,and make use of foreign superior technology and resources to promote domestic technological innovation.Finally,the central and western regions should improve the level of environmental regulation,encourage enterprises to carry out outward foreign direct investment activities,and play the role of environmental regulation to promote the effect of OFDI technology innovation.The research results of this paper show that OFDI with different motives in China can promote domestic technological innovation,which is the innovation of this paper.Finally,the paper also analyzes that the enhancement of environmental regulation intensity can encourage enterprises to promote technological innovation through OFDI channels.The research results of this paper provide a basis for China to achieve a win-win situation in environmental protection and technological innovation and better implement the policy of outward foreign direct investment,which is of great significance.The insufficiency of this paper is the failure to study the technical innovation indicators which are measured by the productivity,which is also the direction of further research.