Foreign direct investment and green innovation in China: An examination of quantile regression

Abstract

This study employs panel data encompassing 31 provinces in China, spanning the period from 2010 to 2020, to investigate the distributional impact of foreign direct investment (FDI) on green innovation (GI). Employing a panel quantile regression model, the research finds the close association between FDI and GI, particularly considering the local GI foundation. Specifically, FDI plays a crucial and influential role in fostering GI within regions characterized by lower levels of GI. However, it does not have a significant impact on promoting GI in regions with higher levels of GI. Further analysis of regional heterogeneity demonstrates that in coastal areas, FDI exhibits a positive and significant impact on GI in provinces with a moderate level of GI. Conversely, in inland areas, FDI can only facilitate GI in provinces with a high level of GI. The research conclusion suggests that the government should enhance the intensity of FDI and implement tailored policies according to the specific characteristics of coastal and inland regions.