The Impact of OFDI on Green Technology Innovation in China

Abstract

Green technology innovation is one of the important driving forces to promote green development of China’s economy. Based on the panel data of 29 provinces, municipalities and autonomous regions in China and the mechanism of Outward Foreign Direct Investment (OFDI) on green technology innovation, this paper introduced different spatial weights and established a Spatial Durbin Model (SDM) to study the impact of OFDI on China’s green technology innovation according to the hypothesis proposed in this paper. It is found that OFDI can significantly promote China’s green technology innovation, which is under the influence of different spatial weights, and presents a significant spatial spillover effect. However, there are obvious regional differences in the spatial impact of OFID on green technology innovation, and the spatial spillover effect in some regions is not significant enough. Then the change of international investment environment will affect the spatial spillover effect of OFDI on China’s green technology innovation. Moreover, OFDI has significant nonlinear characteristics in its impact on green technology innovation. After crossing the threshold, OFDI has significantly increased its impact on green technology innovation, which further confirms that OFDI can effectively promote China’s green technology innovation and it can promote China’s green economic development.