Effect Of China’s OFDI On Energy-Biased Technical Change

With the proposal and promotion of the "dual-carbon" goal,it has become urgent for China to transform its economic development model from "high energy-consumption" and "high-pollution" to alleviating the contradiction between economic growth and ecological environment,this has become the primary task of economic transformation towards energy-saving,low-carbon,and high-quality development.Against this background,Chinese enterprises have strengthened their awareness of conserving energy resources and focused on energy-saving transformations,aiming for high-quality and energy-efficient economic development.Technical change is the key to balancing ecological environment and economic growth,and it has a factor-biased characteristic,with its bias between energy and nonenergy factors affecting energy consumption intensity and having a significant impact on regional environmental quality improvement.As the "going global" strategy continues to be implemented,China’s outward foreign direct investment(OFDI)has been expanding,and it has different degrees of impact on the energy bias of domestic technical change,by means of reverse technology spillover effects,the scale effect of factor markets,and the pre-technology effect of machinery and equipment.At the same time,existing research has increasingly recognized the important role of international trade,foreign direct investment(FDI),and the global value chain in energy-biased technical change under an open economy.In line with this,the dissertation incorporates OFDI and energy-biased technical change into a unified theoretical analysis framework,discussing the role of OFDI in the relative marginal output of energy factors induced by domestic technological change and its influencing mechanisms,exploring whether OFDI contributes to the occurrence of energy-saving technical change in the home country.Insights to be yielded would have important research value for China’s high-quality "going global " strategy,accelerating the formation of an energy-saving society,and advancing towards ecological civilization.Considering the differences in location selection for OFDI based on different investment motivations,there may be different mechanisms affecting the impact of energy-biased technical change in China.Therefore,this dissertation adopts a gradient perspective that distinguishes whether the host country is a developed economy.Based on theories of technical change,biased technical change,and outward foreign direct investment,combined with the reality of China’s OFDI and energy-biased technical change,focusing closely on three important issues: the formation mechanism of the energy-biased technical change effect of OFDI under different gradients,whether China’s OFDI has energy-biased technical change effects,and the differentiated performance of energy-biased technical change effects of OFDI under different regions and conditions.The dissertation conducts theoretical and empirical research on the energy-biased technical change effects of China’s OFDI.Firstly,on the basis of literature and theoretical review,this dissertation constructs a theoretical analysis framework for analyzing the effects of reverse-gradient OFDI and forward-gradient OFDI on energy-biased technical change,and analyzes the mechanisms by which they respectively influence the energy-biased technical change.Drawing on the ideas of the environmental technical change direction model and based on theoretical analysis,this thesis establishes a benchmark model for the mechanism of energy-biased technical change under closed economic conditions,mathematical models are developed to examine the impact of reverse-gradient OFDI and forward-gradient OFDI on energy-biased technical change in the home country,and research hypotheses are proposed,taking into account China’s specific national conditions.Next,the current situation of outward foreign direct investment in China is analyzed,and a nested production function with three factors of capital,labor,and energy is formulated,using the normalized supply-side four-equation systems approach and nonlinear seemingly unrelated regression model to estimate the energybiased technical change index of 30 provinces(direct-administered municipalities,autonomous regions)in China from 2003 to 2019.Then,multiple econometric estimation methods such as OLS regression model,PCSE regression model,FGLS regression model,grouped regression model,instrumental variable method,L-P model,moderation effect model,and dynamic panel threshold model,are used to empirically test the impact of China’s OFDI on energy-biased technological progress and its mechanisms.Finally,important conclusions are summarized and "dual efforts with triple promotion" policy recommendations for accelerating the construction of an energy-saving society,taking into account the conclusion of empirical test and mechanism test of OFDI’s energy-biased technical change effect.Based on the above theories and empirical research,the important conclusions of this dissertation are listed as follows:Firstly,after the proposal of the "Belt and Road" initiative,the investment amount of China’s enterprises in tax haven countries began to increase,indicating that the motivation for Chinese enterprises to engage in tax avoidance projects under the "Belt and Road" initiative is possible.Prior to excluding tax-seeking OFDI,nearly 90% of China’s outward direct investment was forward-gradient OFDI,with the importance of resource-seeking OFDI increasing after the exclusion,and the scale of reversegradient OFDI far exceeding that of forward-gradient OFDI.Tax-seeking OFDI has led to an underestimation of China’s resource-seeking OFDI and an overestimation of forward-gradient OFDI.Overall,the substitution elasticity between energy and nonenergy factors in China’s regional economy is greater than 1,indicating a clear substitution relationship.This suggests that energy and non-energy factors in China have a certain degree of substitutability.Furthermore,the country’s technical change generally has a bias towards energy-saving and capital/labor-using,and there is no neutral technical change.Secondly,regardless of whether the host country is a developed economy or not,China’s OFDI has an energy-biased technical change effect,and outward foreign direct investment is beneficial to China’s energy-saving technical change.Relatively speaking,the negative effect of forward-gradient OFDI on energy-biased technical change is greater,which plays a great role in promoting the development of China’s energy saving economy.Among them,dual-gradient OFDI,inverse-gradient OFDI,and forward-gradient OFDI in the provinces along the "Belt and Road" and coastal provinces(excluding direct-administered municipalities)significantly promote domestic energy-saving technical change.However,dual-gradient OFDI,inversegradient OFDI,and forward-gradient OFDI in provinces outside the "Belt and Road" region and inland provinces(excluding direct-administered municipalities)have no impact on domestic energy-biased technical change.Thirdly,China’s inverse-gradient OFDI to developed economies has a reverse technology spillover mechanism through research and development achievements sharing and internal personnel mobility.This mechanism affects the reverse technology spillover effect of energy-biased technical change and further promotes domestic energy-saving technical change.Among them,the inverse-gradient OFDI of the provinces along the "Belt and Road" and coastal provinces(excluding directadministered municipalities)have obvious reverse energy-saving technology spillover effects,while the inverse-gradient OFDI of the provinces along the "Belt and Road" and inland provinces(excluding direct-administered municipalities)do not effectively play the reverse technology spillover mechanism.The reverse energy-saving technology spillover effect of inverse-gradient OFDI has non-linear characteristics under different regions and conditions,and the reverse energy-saving technology spillover effect of inverse-gradient OFDI is more obvious in the eastern region of China,which has stronger technology absorption capacity.The different technology absorption capacities represented by human capital,R&D capital,and R&D human capital have regulating effects and threshold effects on the reverse energy-saving technology spillover of inverse-gradient OFDI.Among them,the level of human capital in the region has the greatest influence on the regulatory effect of the reverse energy-saving technology spillover of inverse-gradient OFDI,and after the R&D human capital reaches a high threshold level,it promotes the strongest effect of inverse-gradient OFDI on China’s technical change towards energy-saving bias.Fourthly,China’s forward-gradient OFDI to less developed economies has an industrial structure upgrading mechanism through the marginal industry transfer path,which affects the scale effect of factor markets in energy-biased technical change,thereby promoting domestic energy-saving technical change.Empirical results show that China’s forward-gradient OFDI has significant promoting effects on industrial structure upgrading,energy efficiency,and transformation speed.However,there is no industrial structure upgrading mechanism in inland provinces(excluding directadministered municipalities)through forward-gradient OFDI,and there is even evidence of increased industrial energy consumption intensity in provinces outside the Belt and Road region,indicating that China has not specifically transferred highenergy-consuming industries through the "Belt and Road" channel,providing empirical evidence to respond to the “China pollution transfer theory”.Fifth,China’s forward-gradient OFDI to underdeveloped economies has a mechanism for green technology innovation through R&D cost-sharing.This mechanism affects the early-stage technology effects of machinery and equipment in energy-biased technical change,thereby promoting domestic energy-saving technical change.Further analysis shows that enterprises in provinces along the Belt and Road,provinces outside the Belt and Road,coastal provinces(excluding direct-administered municipalities),and inland provinces(excluding direct-administered municipalities)are all willing to invest profits obtained from OFDI projects in underdeveloped economies into incremental green technology innovation activities that can expand market share.However,there is insufficient investment in disruptive green technology innovation research and development activities.At present,only the forward-gradient OFDI in coastal provinces(excluding direct-administered municipalities)can significantly improve the level of disruptive green technology innovation in the region.The possible innovations and marginal contributions of this article are mainly reflected in the following four aspects:Firstly,in terms of model construction,it expands the biased technical change model.Considering that energy is the fundamental strategic resource in today’s society and the fundamental production factor of the economic system,this dissertation introduces it as an independent production factor into the biased technical change model.By setting up a three-factor production function that aggregates capital and labor factors and nests the energy factor,it expands the technology bias model,constructs a mathematical model to investigate the impact of OFDI on the home country’s energy-biased technical change and explains the mechanisms by which inverse-gradient OFDI and forward-gradient OFDI influence energy-biased technical change.The second aspect refers to the calculation of the energy-biased technical change index using the standardized supply-side four-equation system approach.This thesis designs an index to measure the degree of technical change bias towards energy factors and uses the normalized supply-side four-equation system approach to measure the energy-biased technical change index of each province(directadministered municipalities,autonomous regions)in China.The third aspect is about the research perspective,which studies the green economic effects of China’s OFDI from the perspective of biased technical change.Based on the environmental technical change direction model,combined with the theory of outward foreign direct investment and biased technical change theory,the article finds the intrinsic relationship between OFDI and energy-biased technical change,and discusses the different impact mechanisms of inverse-gradient OFDI on developed economies and forward-gradient OFDI on underdeveloped economies on their home country’s energy-biased technical change.The fourth aspect is about empirical testing,which employs a variety of empirical methods for testing the mechanisms of the energybiased technical change effect of China’s OFDI.The dissertation uses various empirical methods,such as OLS regression method,FGLS regression method,PCSE method,Two-Stage Least Squares Instrumental Variables(2SLS)method,moderation effect model,dynamic panel threshold model,etc.,to test the energy-biased technical change effect of China’s OFDI and the role of the reverse technology spillover mechanism,industrial structure upgrading mechanism,and green technology innovation mechanism through benchmark regression,robustness test and endogeneity test,increasing the credibility of the empirical results.The regional heterogeneity of the four types of regions,namely,provinces along the Belt and Road,provinces outside the Belt and Road regions,coastal regions(excluding directadministered municipalities),and inland regions(excluding direct-administered municipalities),is explored in terms of the test of the energy-biased technical change effect of dual-gradient OFDI,inverse-gradient OFDI,and forward-gradient OFDI,as well as the empirical testing of the three mechanisms.