Environmental Regulation’s Impact On Selection Of International Direct Investment Entry Mode

Since the reform and opening up, China has gradually integrated into the tide of economic globalization and involved in the international transfer actively. On one hand, FDI into China has a rapid growth. On the other hand, many Chinese companies have to go out. OFDI of China also showed a rapid growth. Excitedly, we should pay attention to states environmental policy which is against the more and more serious problem of environmental pollution. They improve the global environment management. In this context, it has practical significance to examine the impact of environment management on the selection of FDI and OFDI entry mode.Firstly, based on current development of international direct investment and environmental regulation policy over the past decade, the study summarizes the theoretical development of international direct investment and empirical research on environmental regulation and international direct investment. Theory development includes the challenges to four main theories and hypothesis. But the latter empirical researches include mainly from four respects, which include the distribution of international direct investment, capital flows, competitiveness and entry mode.Secondly, by summarizing the measure method of environmental regulation and entry mode of international direct investment, the paper constructs the frame structure. Then, it analyses the factors that influence invest entry mode selection from FDI and OFDI respects. At the same time, the study summarize empirical formula, which provides a good foundation of a accurate and efficient empirical researchThirdly, the study tests a relationship between environmental regulation and international direct investment by using FDI and OFDI two bidirection data. On the respect FDI entry mode selection, the paper uses FGLS on panel data of Chinese30provinces during2002-2011for empirical analysis. The result shows that China has actually become a "pollution haven." However, there are differences between different FDI entry mode, On the respect of OFDI entry mode selection, this paper use Logit binary choice model to find that when Chinese enterprises are facing a host country who has higher level environmental regulation the in international market, they prefer to choose the Cross-border M&A rather than greenfield investments.Finally, the study reveals the basic conclusions. From two perspectives, macro and micro, this paper suggests how to attract FDI initiatively and select the appropriate OFDI entry mode.