FDI Flows And Industrial Pollution: Based On Industrial Relations Analysis

With the accelerating process of economic integration, a large number of foreign investments promote the development of China's economy. As foreign investment flows into different industries, in particular, a large number of foreign investment switches from secondary industry to tertiary industry gradually since 2005, which has played a positive role in China's upgrading of industrial structure. However, while foreign investment significantly promotes China's economic growth, it also inevitably causes certain negative impact on China's environment. As people's living standards improves, more and more attention has been attracted on environmental quality, which arouses hot debates in terms of the environmental consequence of FDI in China.By decomposing the total pollution emission into scale and technique effects, this paper establishes a dynamic panel data model to study how FDI affects pollution intensity of seven industrial pollutants. Our original data are collected based on 36 industrial panel data during 2001-2009. The first chapter introduces the significance of this study and the main research literature. The second chapter is the main chapter. through the study of the pollution decomposition, we establish our dynamic panel data estimation model for the scale and technique effects respectively. We first estimate our empirical model for the total samples of 36 industries, and calculate the various environmental effects based on our estimation results. In the third chapter, the total sample is divided into two sub-samples according to the intensity of foreign investment, and the various environmental effects are also estimated for the two subsamples respectively. Generally our estimation results support the popular "pollution haven hypothesis". Finally, relevant policy suggestions are presented based on our empirical results, focusing on maintaining a sustainable development strategy, which can effectively coordinate the tradeoff between utilizing foreign investment, economic growth and protecting environment.