Does the Impact of China’s Outward Foreign Direct Investment on Reverse Green Technology Process Differ across Countries?

Songping Zhu,Azhong Ye

doi:10.3390/su10113841

Abstract

The reverse technology spillover effect of Outward Foreign Direct Investment (OFDI) has been widely discussed. In the context of pursuing green growth, a few scholars began to study the impact of OFDI on home country green technological progress or green total factor productivity. However, few of these papers have made a thorough analysis of how OFDI affects the home country’s green technological progress, and have not considered the impact of different types of OFDI on green technological progress. This paper extends the basic analysis framework of technological progress to green technological progress, and discusses for the first time the ways for China to invest in developed and developing countries to achieve green technological progress. Specifically, this paper combines the global Malmquist productivity concept with the directional distance function to construct the global Malmquist Luenberger (GML) index to describe green technological progress of China’s provinces, and uses panel data model from 2003 to 2016 to study the impact of China’s investment in different types of countries. The results show that: (1) China’s investment in developed countries can bring reverse green technology spillovers and promote China’s green technology progress. But this is also affected by China’s domestic human capital stock, the increase in human capital stock is conducive to the absorption of green technology. (2) OFDI flows to transition or developing countries have failed to bring about green technological progress, but domestic R&D capital stock can produce a control response. (3) Environmental regulation, import trade and domestic R&D capital stock can bring positive effects on green technology progress, while foreign direct investment, fiscal decentralization and economic growth hinder green technology progress. (4) There is regional heterogeneity in the impact of OFDI with different directions on green technological progress. Because of environmental regulation and economic development, the eastern region of China is easier to obtain reverse green technology progress than the central and western regions in the process of OFDI.

Highlights

Since reform and opening up, China’s economy has maintained rapid growth for a long time
The results showed that Outward Foreign Direct Investment (OFDI) in the United States significantly improves the technological innovation capability of Japanese firms
The main contribution of this paper is to study the reverse green technological progress produced by OFDI investment in different countries under the unified framework for the first time

Summary

Introduction

Since reform and opening up, China’s economy has maintained rapid growth for a long time. There are two direct reasons for the decline of environmental pollution with economic growth: firstly, the transfer of pollution-intensive industries from developed countries to developing countries can produce Pollution Haven Effect [5] in developing countries, while the developed countries reduce pollution through structural effects; Secondly, the green technology progress effect of energy conservation and cleaner production. Both of these are due to people’s increasing environmental quality requirements as their income levels rise, but waiting for the Kuznets turning point has been unable to cope with the increasing environmental pressure [6].

Methods

Results

Conclusion