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Abstract
As an important policy to promote global energy transition and carbon emission reduction, does the carbon emission trading policy help promote foreign direct investment inflows, thus alleviating the contradiction between environment and economic development? Based on the “OLI paradigm,” by using the data of China’s 30 provinces from 2007 to 2016 and taking China’s pilot implementation carbon emission transaction policy in 2013 as the natural experiment, so as to construct a differences-in-differences model, this study empirically analyzed the impact of carbon emission transaction policies on foreign direct investment and conducted an in-depth analysis and discussion on related heterogeneity. The empirical results show that 1) there is a positive correlation between the carbon emission trading policy and foreign direct investment; 2) the results of heterogeneity analysis show that the effect of carbon emission trading policy on the increase in FDI is more significant in the areas with a stronger environmental regulation, a higher degree of marketization, and low energy consumption. The conclusions of this study enrich the analysis of the effectiveness of government environmental policies from the perspective of both environment and economic development and provide relevant policy enlightenment for developing countries in environmental regulation and attracting foreign direct investment.Systematic Review Registration: [website], identifier [registration number].
Highlights
The coordinated development of the economy and environment has been a significant issue of common concern all over the world
This study takes the most representative developing country China as an example, and based on the panel data of 30 provinces in China from 2007 to 2016, from a new perspective of FDI, this study examines the impact of China’s pilot implementation of the carbon emission trading policy on FDI inflows, attempts to discuss the relevant heterogeneity from the perspectives of different environmental regulation intensity, marketization degree, and energy consumption, and further provides an empirical basis for developing countries to optimize the carbon emission trading policy and introduce FDI
The ownership advantages, internalization advantages, and location advantages of foreign investment can be brought into full play in areas with stronger environmental regulations, a higher degree of marketization and low energy consumption, these areas are more attractive to multinational companies; the positive contribution of emissions trading policies to FDI is more significant in these regions
Summary
The coordinated development of the economy and environment has been a significant issue of common concern all over the world. In 2013, carbon emission trading was officially launched in the pilot areas, hoping to solve the problem of carbon emission through market-oriented means, achieve green and sustainable economic development, and set an example for the global response to climate issues and the realization of “carbon neutrality.” This quasi-natural experiment provides a sample for studying the coordinated development of the environment and economy in developing countries and provides a reference for other developing countries on how to deal with climate change. This study provides a reference for China and other developing countries on how to deal with climate change, coordinate environmental and economic development, and achieve “carbon neutrality” in the world It provides policy suggestions for developing countries to introduce, build, and improve carbon trading market and increase FDI inflow, and provides an academic reference value for solving the dilemma of “environmental pollution vs economic development.”. The last part summarizes the whole study and briefly discusses the corresponding policy implications brought by this study
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