The Impact of Foreign Direct Investment on Environmental Pollution in China: Corruption Matters

Shi Wang; Hua Wang; Qian Sun

doi:10.3390/ijerph17186477

The Impact of Foreign Direct Investment on Environmental Pollution in China: Corruption Matters

Int J Environ Res Public Health. 2020 Sep 5;17(18):6477. doi: 10.3390/ijerph17186477.

Authors

Shi Wang^{1

2

3}, Hua Wang⁴, Qian Sun⁵

Affiliations

¹ School of Economics and Finance, Xi'an International Studies University, Xi'an 710128, China.
² Institute of Communication and Global Public Opinion, Xi'an International Studies University, Xi'an 710128, China.
³ "One Belt One Road" Economic and Trade Cooperation Innovation Team, Xi'an International Studies University, Xi'an 710128, China.
⁴ School of Foreign Studies, Xi'an Jiaotong University, Xi'an 710049, China.
⁵ School of Economics and Management, Southwest Petroleum University, Chengdu 610500, China.

Abstract

This research investigates the interaction effect between corruption and foreign direct investment (FDI) on environmental pollution by applying the spatial econometric model to the panel data of China's 29 provinces from 1994 to 2015 and analyzes the differences between China's eastern, central and western regions. Results show that (a) FDI inflow deteriorates the environmental quality, validating the pollution haven hypothesis (PHH); (b) by weakening the environmental standards, corruption enables the inflow of low-quality FDI, weakens the spillover effect of FDI and indirectly causes further environmental pollution; (c) the interaction effect between corruption and FDI on environmental pollution is less significant in the eastern region than in the central and western regions.

Keywords: FDI; corruption; environmental pollution.

Publication types

Research Support, Non-U.S. Gov't

MeSH terms

China
Economic Development*
Environmental Pollution* / prevention & control
Internationality*
Investments*