Research On The Impact Of Foreign Direct Investment On Environmental Quality

Since the beginning of the new century,countries have become more inclusive in opening up.Foreign direct investment（FDI）has become a"big tool"for the economic growth of host cities and the global circulation and allocation of international capital.It is also one of the main ways of transnational cooperation and multilateral investment.In December 2013,the New First-tier City Research Institute of China First Business Economics put forward the concept of"new first-tier City"for the first time,which has promoted the economic development of all provinces and cities to a certain extent.With the title of"new first-tier"cities,15 second-tier cities with rapid development have been upgraded to"new first-tier cities",and have made greater progress in attracting foreign direct investment and utilizing foreign capital,gradually matching the 4 first-tier cities.Foreign direct investment not only promotes urban infrastructure construction and economic development,but also brings many impacts on local environmental quality.In order to fully understand the impact of foreign direct investment on urban development,it is necessary to pay attention to the change of environmental quality,so as to better promote urban construction,realize the strategy of sustainable development,and set an example and demonstration to the first-tier and other cities outside the new first-tier.After reviewing relevant literature,it is found that most of the studies on first-tier and new first-tier cities at home and abroad stay in the aspects of economic development and talent introduction,and there is a lack of relevant studies on the impact of foreign direct investment on environmental quality.A few existing studies have found that the impact of foreign direct investment on environmental quality mainly includes positive effect,negative effect and uncertain effect,and the conclusions are not uniform.Therefore,based on these three viewpoints and with the help of three theories of pollution haven,pollution halo and environmental Kuznets curve,this thesis analyzes the impact of foreign direct investment on environmental quality and its mechanism.This thesis selects the panel data of 19 first-tier and new first-tier cities from 2009 to 2020 as samples,analyzes the current situation and characteristics of foreign direct investment and environmental quality in first-tier and new first-tier cities,and uses the emission of industrial SO₂ to measure the air environmental quality of a city.The influence of foreign direct investment on environmental quality is analyzed by using logarithm model.The empirical results of this thesis show that the overall impact of FDI on the environmental quality of China’s first-tier and new first-tier cities is negative.The more FDI is actually utilized,the more industrial SO₂ emissions will be generated,leading to a decline in environmental quality,which verifies the"pollution haven theory".In addition,when the economic conditions are poor and the development is immature,the economic and environmental quality is inversely proportional.When the economic development breaks through a certain level,the economic and environmental quality is proportional,and the economic growth will improve the environmental quality,showing an"inverted U-shaped"trend,which verifies the"environmental Kuznets curve theory".At the same time,this thesis also verifies that the impact of foreign direct investment on urban environment is heterogeneous and has different impacts on cities with different environmental quality and economic development.In addition,in order to solve the endogeneity problem,this thesis uses"difference-in-differences"analysis to conduct a robustness test.The results show that there is no endogeneity problem between the explained variable（industrial SO₂ emission）and the core explanatory variable（utilization of foreign direct investment）studied in this thesis.Finally,based on the research results,this thesis puts forward relevant policy recommendations to provide references for other cities to make full use of foreign capital,so as to promote the balanced development of our urban economy and environment.