Study On The Impacts Of Foreign Direct Investment On China’s Industrial Green Total Factor Productivity

The reform of the Chinese e?onomy initiated by Deng Xiaoping in 1978 led to the rise of China’s industrial sector,however,because of its extensive development methods,energy consumption soared and with it came serious environmental issues,limiting sustainable industrial development.In this regard,"Industrial Green Development Plan(2016-2020)" and "Made in China 2025" highly emphasize the need to accelerate the construction of ecological civilization and foster green growth in Chin’s industrial sector,which means both "economic performance" and "environmental performance" should be taken into consideration.Also,the contribution of industrial growth should be weighed against green total factor productivity(GTFP)as sustainability is essential.Driven by the strategy of "Going Out",an increasing scale of foreign direct investment(FDI)has flowed in China.Some researches have indicated that although FDI has some positive influence on China’s industrial economic development,some local governments have absorbed high-polluting FDI in pursuit of "economic performance",leading to increased environmental pollution emissions in industrial production.Therefore,in order to make FDI better benefit the green growth in Chin’s industrial sector,it is of great significance to discuss impacts of Foreign Direct Investment on China’s industrial GTFP.The overview of the current studies shows that some scholars have studied impacts of FDI on China’s industrial GTFP,but FDI lacked in-depth discussions,since it was always regarded as a control variable.In addition,related studies are still focusing on discussing the situation of FDI from single country,only a handful of scholars have further discussed the impact of different sources FDI on China’s industrial GTFP.Based on these,this study attempts to expand as follows:in order to examine a more in-depth analysis on the impact of FDI on China’s industrial GTFP,this study sets FDI as the core explanatory variable and China’s industrial GTFP as the explained variable,then carries out empirical analysis and analyzes the result in depth according to the influence mechanism;in view of the fact that characteristics of FDI may vary according to different sources,the study further explores whether the impact of FDI from different sources on China’s industrial GTFP is different.The main contents of this study are as follows:first,based on the overview of the current relevant studies,this study tries to expand in accord to the shortcoming of the current studies.After theoretical arrangement,this study analyzes the current situation of aggregate and different sources FDI in China.then the method of DEA-SBM-GML is employed to estimate the dynamic change of China’s industrial GTFP.From the analysis of the measurement results,China’s industrial GTFP generally shows a rising trend during the research period,and the main driving force for its growth is technological progress.After an influence mechanism is summarized,FDI is taken as the core explanatory variable,GTFP as the explained variable,and environmental regulation,industrial structure,human capital level,infrastructure,R&D investment,and trade dependence are taken as explanatory variables,and then panel data from 30 provinces in China during the period of 2004 to 2016 is used to carry out an empirical analysis through Generalized Least Squares with fixed effects.Further,FDI is subdivided into four categories according to its sources,then their impacts on China’s industrial GTFP are explored respectively.The result of the empirical analysis indicates that aggregate FDI influences China’s industrial GTFP negatively.As for the results of explanatory variables,environmental regulation,human capital level,infrastructure level,and R&D input promote China’s industrial GTFP,while environmental regulation,trade dependence and industrial structure inhibit the growth of China’s industrial GTFP.In addition.FDI from different sources has a diverse influence on China’s industrial GTFP.To be specific,FDI coming from developed European countries(England.Germany,and France)promotes China’s industrial GTFP,and FDI coming from America have an insignificant positive impact on China’s industrial GTFP.The remaining two categories(FDI coming from Taiwan of China,Singapore,Korea,Japan,and FDI coming from Hong Kong of China)have negative effects on industrial GTFP.Considering that there may be a lag effect of FDI,this study adds the lag of the core explanatory variable to the regression based on the original model.The results show that,except the category of FDI from European developed countries,no significant lag effects are found in the rest categories of FDI.The 2SLS method is then employed because of the possibility of the endogenous problem.Its result indicates that the results output by GLS are still robust after considering the endogenous problems.Finally,based on the above analysis,this study draws several conclusions and attempts to put forward suggestions which will influence corresponding policies.