Foreign Direct Investment Dynamic Performance with Low-Carbon Influence: A Provincial Comparative Application in China

Xinna Zhao,Yuhang Tang,Milin Lu,Xiaohong Zhang

doi:10.3390/ijfs7030046

Abstract

Cross-border capital flows have been a major force driving economic globalization. Foreign direct investment (FDI) plays a decisive role in seeking out market technology brands and enhancing the global competitiveness among international inflows. With the requirement of economic development, this paper focused on a performance evaluation of FDI in China. However, because of the planned transformation to a market economy in China, FDI has been promoted with a regional cascade structure. Similar to the development track of the Chinese economy, it is necessary to evaluate FDI quality more than purely quantity from a provincial point of view. Therefore, this paper evaluated the Chinese provincial FDI total factor productivity using the dynamic Malmquist model. In contrast to traditional evaluations, this paper focused on inter-temporal influence in FDI performance evaluation. To understand the inter-temporal effects, physical capital stock was defined as a dynamic variable in FDI sustainability performance. Additionally, with the pressure to reduce emissions, energy consumption was also considered during the evaluation. The empirical results revealed that the dynamic variable is the bottleneck in FDI performance for most Chinese provinces. It is only efficient in a few municipalities and provinces, such as Shanghai and Guangdong. Additionally, energy conservation was more efficient in the performance evaluation of eastern regions in China.

Highlights

Over the past few decades, cross-border capital flows have been a major force driving economic globalization
This paper evaluated the different dimensions of provincial dynamic Foreign direct investment (FDI) performance in China
An expanded dynamic Malmquist model with the inter-temporal effects was built based on dynamic SBM (Tone and Tsutsui 2010)

Summary

Introduction

Over the past few decades, cross-border capital flows have been a major force driving economic globalization. To understand the inter-temporal effects, FDI sustainability performance is evaluated depending on dynamic factors, such as the physical capital stock. TFihnaisncpiaal pSteurd.h2a0s19m, 7a, dx eFOcRonPtErEibRuRtEioVnIEsWat the methodological and application levels This p3aopfe1r6 has built the dynamic Malmquist model considering the physical capital stock as the inter-temporal eeffffeeccttiinnttootthheettrraaddiittiioonnaallMMaallmmqquuiissttmmooddeell. The distance function Dt is the DMUs’ efficiency at period t with respect to the efficient frontier that considers the inter-temporal effect. The distance function Dt+1 is the DMUs’ efficiency at period t + 1, with respect to the efficient frontier considering the inter-temporal effect. Similar to traditional Malmquist decomposition thinking (Färe et al 1994), DTEC means the attractive power for performance improvement, such as the allocation of evaluation variables and scale efficiency. DTC is denoted as the potential power, such as the managerial style

Data Explanation

Human capital stock

Energy consumption

Empirical Results and Discussion

Hierarchical Clustering of Provincial FDI Performance

Conclusions and Policy Implications