The Impact of Environmental Regulation on FDI Spillover Effects: A Cross-Provincial Study *

Zhang Zhongyuan1 and Zhao Guoqing2
1 National Institute of International Strategy, Chinese Academy of Social Sciences, Beijing, China
2 School of Economics, Renmin University of China, Beijing, China

 
Abstract: Using correlated data from thirty Chinese provinces for the years between 2000-2009, this paper examines the impact of FDI spillover and environmental regulation on the progress of industrial technology in China as well as the impact of environmental regulation on the marginal effect of FDI. Empirical results show that while FDI spillover has a negative effect, enhanced environmental regulation has a positive effect. Environmental regulation also has a significant impact on the marginal effect of FDI spillover on industrial technology development. Separate studies on state-owned and private enterprises suggest that environmental regulation has a heterogeneous effect on industrial technology progress and the marginal effect of FDI spillover on industrial technology progress.
Key words: FDI spillovers, environmental regulation, technological progress

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