Study On The Non-linear Influence Of Environmental Regulation On Foreign Direct Investment In China

In recent years,China has been attracting one of the highest foreign direct investment in the world.The large-scale introduction of foreign direct investment not only gives full play to the technology spillover effect,but also promotes the economic and social development of China,especially the economic and social transformation of China.It can be said that foreign direct investment has become an important force to drive China's economic growth and that we can never ignore the effect of it.However,the more and more strength environmental regulations owing to China's increasingly severe environmental situation coupled with the overall volatility of international foreign direct investment owing to the current world economic downward pressure,the realization of China's foreign direct investment long-term steady development is not easy to gain.Therefore,whether China's foreign direct investment will be negatively affected by environmental regulation or not? How to promote the role of environmental regulation in foreign direct investment? Using theoretical and empirical means to analysis and answer these questions is of great theoretical and practical significance for China's adjusting economic and social policies,improving ecological and environmental protection policies,realizing the long-term and healthy development of economy and environment.In order to explore the influence that environmental regulation exerts on foreign direct investment thoroughly and then further reveals the necessity and urgency of this proposition,this paper qualified and analyzed the status quo of the foreign direct investment as well as the environmental regulation in China with the help of indexes like total foreign direct investment,year-on-year growth rate of foreign direct investment,location entropy of foreign direct investment and the environmental regulation strength index.Next,from the perspective of heterogeneous type of foreign direct investment enterprises,this paper illustrates how the clean type foreign direct investment enterprises and polluting foreign direct investment enterprises react to environmental regulation respectively,and then how the whole foreign direct investments react to environmental regulation.In order to empirical analysis of the impact of environmental regulations on foreign direct investment,this article constructs a threshold model using panel data,combined with theoretical analysis,with foreign direct investment as dependent variable,environmental regulation strength as threshold variable,human capital as dependent threshold variable,and institutional quality,fiscal decentralization strength,infrastructure,industrial structure,degree of opening as control variables.Based on the regression of the benchmark model,the robustness test was carried out by three methods,namely,replacing core explanatory variables,screening sample size,replacing core explanatory variables and screening sample size,to ensure the reliability of the benchmark regression results.Through the above research,finally,this paper's following conclusions are drawn: With the regulation of human capital,the impact of environmental regulations on foreign direct investment in China presents a v-shaped feature of decreasing first and increasing later.When human capital not crossing the threshold,the cost of polluting foreign direct investment enterprises in China increase,part of the polluting foreign direct investment outflows our country;with unmatched human capital,clean type foreign direct investment cannot enter our country by negative screening effect,clean type foreign direct investment eventually down.When human capital crosses the threshold,pollution-oriented foreign direct investment enterprises continue to stay in China by transforming into clean-oriented foreign direct investment enterprises,while clean-oriented foreign direct investment which is less affected by environmental regulations enters China through positive screening effect when human capital accumulation reaches a certain level.At the same time,the agglomeration economy will further attract a large number of clean foreign direct investment,which will eventually increase with the strengthening of environmental regulation.Based on the above research and conclusions,in order to promote the steady development of foreign direct investment in China under the premise of gradually strengthening the implementation of environmental regulation policies,the Chinese government can adopt the following policies: Strengthen the accumulation of human capital and give full play to the regulating role of human capital in the influence of environmental regulations on foreign direct investment;Release institutional dividend,reduce the institutional transaction cost of foreign direct investment,and promote the entry of foreign direct investment.