Does China’s Low-Carbon Pilot Policy Promote Foreign Direct Investment? An Empirical Study Based on City-Level Panel Data of China

Chang Zhao,Bing Wang

doi:10.3390/su131910848

Abstract

As an important driving force of China’s economic growth, foreign direct investment (FDI) may be affected by China’s low-carbon pilot policy. Therefore, this paper regards the low-carbon pilot policy as a quasi-natural experiment, and uses the difference-in-difference (DID) model and the panel data of 189 cities in China from 2011 to 2018 to explore the actual impact and intermediary mechanism of low-carbon pilot policy on FDI. The study found that low-carbon pilot policy has a significant promotion effect on FDI, and industrial optimization and upgrading is an important way. At the same time, we construct the difference-in-difference-in-difference (DDD) model, and discuss the heterogeneity of policy effect caused by resource endowments and the individual characteristics of government officials in the process of policy implementation. The results indicate that resource-rich cities can enhance the promotion effect of low-carbon pilot policy on FDI. Similarly, when the mayor of the pilot city is a female, or obtains a master’s degree or a doctorate degree, or majored in non-economics, respectively, the policy effect will be more obvious. In addition, in order to verify the reliability of the research conclusions, this paper also uses a placebo test and data truncation to conduct a series of robustness tests.

Highlights

Since the reform and opening up, China’s economy has made remarkable achievements
At the same time, comparing the coefficients of Post × Treated in column (4) (i.e., 0.2691) and column (6) (i.e., 0.2188) of Table 4, we find that when industrial optimization and upgrading is added to the regression model, the coefficient of Post × Treated decreases, which implies that industrial optimization and upgrading has a partial mediating effect
The results indicate that China’s low-carbon pilot policy can significantly promote foreign direct investment (FDI), and industrial optimization and upgrading is an important way

Summary

Introduction

Since the reform and opening up, China’s economy has made remarkable achievements. In the context of economic globalization and trade liberalization, with the deepening of China’s opening up, the huge market, abundant resources, cheap labor, and stable investment environment have created many dividends for foreign-invested enterprises, makingChina one of the most attractive host countries. Since the reform and opening up, China’s economy has made remarkable achievements. In the context of economic globalization and trade liberalization, with the deepening of China’s opening up, the huge market, abundant resources, cheap labor, and stable investment environment have created many dividends for foreign-invested enterprises, making. In the context of increasing downward pressure on the economy, China’s economic growth is still mainly dependent on traditional high-pollution industries. Whether the introduction of FDI will further aggravate the energy crisis, environmental pollution and ecological degradation of China has attracted widespread attention [3,4]

Methods

Results

Conclusion