The impact of FDI on environmental pollution in China: evidence from spatial panel data.

Abstract

With the rapid development of the economy, China's environmental problems remain prominent, and ecological environmental protection has far to go. Many factors work together to affect environmental pollution. In this study, based on the spatial correlation of environmental situation between adjacent regions, spatial autoregressive models are constructed to examine the impacts of foreign direct investment (FDI) on environmental pollution in China. We find an inverted U-shaped relationship between FDI and environmental situation. The study further investigates the mediating effect of economic scale, technology, and industrial structure between FDI and environmental situation. The results show that regions with a larger economic scale and better industrial structure experience a greater FDI impact on environmental situation, but technological level does not serve as a moderator in this study. Our findings have important implications for environmental pollution control and provide important insights for China into a new stage of high-quality development.