Environmental Regulation?Foreign Direct Investment And Economic Growth

When economic development is facing severe environmental problems and transformation pressures,the public hopes that the government can issue strict environmental policies to rectify industrial production,and a country's economic development has its corresponding stage characteristics.Industrialization process is also an important part of economic development.What impact will severe environmental regulation have on economic development?How should the government coordinate the relationship between them?Based on the existing literature,this paper takes the policy of Two Control Zones' implemented in 1998 as a quasi-natural experiment to study whether environmental regulation affects domestic economic growth through the intermediary variable of foreign direct investment from the perspective of open economy.Firstly,this paper expounds the current situation of air pollution prevention and control in China and the specific implementation measures of the policy of'Two Control Zones';then,based on the factual data,we make a comparative analysis of the characteristics of China's industrial structure and foreign capital structure,and establish a theoretical transmission mechanism;finally,we use the data of prefecture-level cities in China from 1994 to 2014,with the aid of DID analysis method,sequential test method,this paper explores whether environmental regulation affects economic growth by restraining foreign capital inflow through the intermediary effect model.We grouped the samples according to the level of foreign capital utilization and then regression to test the robustness of the regression results.The PSM-DID method is also used to test the robustness of the results.From the results of the regression of the overall sample,the implementation of the policy of 'Two Control Zones' has significantly reduced the foreign direct investment in China,thus inhibiting the development of China's secondary industry.It also illustrates the unreasonable distribution of foreign investment structure,poor quality and the proportion of foreign enterprises in manufacturing industry with high emissions during the period.The results of grouping regression show that the level of opening up in eastern and central and western regions of China differs greatly.The role of foreign capital in promoting the economic growth of prefecture-level cities in central and western regions of China is not obvious yet.The restraint effect of 'Two Control Zones'policy on economic growth is weakened from east to west.Finally,this paper puts forward relevant policy recommendations from three aspects:the implementation strategy of environmental regulation,the focus of introducing foreign capital and government finance.