The "Pollution Halo" Effect of FDI: Evidence from the Chinese Sichuan-Chongqing Urban Agglomeration.

Abstract

In this paper, panel data from nineteen key cities in the Sichuan–Chongqing urban agglomeration from 2003 to 2016 were used as the study sample. Using the stochastic impacts by regression on population, affluence, and technology (STIRPAT) model, the effect of foreign direct investment (FDI) on particulate matter (PM2.5) pollution and its action mechanism in the Sichuan–Chongqing urban agglomeration were considered for both socioeconomic and natural factors. The results showed that the “pollution halo” hypothesis of FDI in the Sichuan–Chongqing urban agglomeration has been supported. There are significant positive spatial spillover effects of PM2.5 pollution in this urban agglomeration, and the introduction of FDI is conducive to alleviating PM2.5 pollution in the urban agglomeration. Similar to the “inverted U” curve proposed by the environmental Kuznets curve (EKC) hypothesis, there was a significant “inverted U” curve relationship between PM2.5 pollution and economic growth in the Sichuan–Chongqing urban agglomeration. However, there was a significant “U”-type curve relationship between the urbanization degree and the PM2.5 concentration, which indicates that the current urbanization mode may aggravate the pollution degree of PM2.5 in the urban agglomeration in the long term. Furthermore, the two natural factors of annual average temperature and annual precipitation play an important role in PM2.5 pollution and spatial spillover effect in the Sichuan–Chongqing urban agglomeration. Economic development and rationalization of the industrial structure are the main ways by which FDI affects PM2.5 pollution in the urban agglomeration. The research conclusions of this study can be of great practical significance to optimize the regional industrial layout, control PM2.5 pollution, and establish a sustainable development policy system in the Sichuan–Chongqing urban agglomeration.