Abstract
Inclusive green growth is a sustainable development mode in pursuit of economic growth, social equity, and environmental protection. At present, a large number of articles have discussed the impact of foreign direct investment (FDI) on economic growth, green growth, and inclusive growth. However, the research about inclusive green growth is mainly descriptive. This paper constructs China’s inclusive green growth index and analyzes the impact of FDI on inclusive green growth in China. Specifically, by constructing a super efficiency slacks-based measure model (which has two undesirable outputs: income disparity and environmental pollution) to calculate the Inclusive green growth index, this paper compares and analyses the differences and regional characteristics of China’s total factor productivity, inclusive total factor productivity, green total factor productivity, and inclusive green total factor productivity. We find that total factor productivity is decreasing after considering undesirable output, and the traditional total factor productivity is higher than the inclusive green total factor productivity by 0.112; at the regional level, the trend of the total factor productivity is gradually decreasing from east to west, which indicates that there are regional differences in inclusive green growth of China, and there is room for improvement. Meanwhile, we construct a panel vector autoregressive model (PVAR) and use generalized impulse response function and variance decomposition to analyse the influence of FDI on China’s inclusive green total factor productivity. The results show that FDI is beneficial to the promotion of inclusive green total factor productivity in China, and environmental pollution in the FDI process is an important factor hindering the inclusive green total factor productivity.
Highlights
Since the Asian Development Bank proposed “inclusive growth” in 2007, the term “inclusiveness”has become a high frequency word in many international political conferences and academic seminars.Many countries have taken it as their national development goals to solve the problems of unbalanced development
The results show that foreign direct investment (FDI) is beneficial to the promotion of inclusive green total factor productivity in China, and environmental pollution in the FDI process is an important factor hindering the inclusive green total factor productivity
One is that the inclusive green total factor productivity index of all provinces and regions of China is calculated by using the super-efficient non radial slacks-based measure model (SBM) which the income disparity and environmental pollution are innovatively as the undesired output of economic development
Summary
Since the Asian Development Bank proposed “inclusive growth” in 2007, the term “inclusiveness”. Foreign direct investment (FDI) can promote the economic growth of the host country by enhancing its total factor productivity (TFP) of the host country. Most developing countries are facing the contradiction between economic growth and environmental pollution, and the widening income gap. Can FDI enhance the inclusive TFP of a country and promote economic inclusive green growth? In this article, we take China as a case study to see whether FDI can promote inclusive green growth. It can provide policy suggestions on how to better introduce foreign direct investment, promote the traditional total factor productivity and enhance the inclusive green level of economic growth under the new normal state.
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