The Research On FDI,Fiscal Decentralization And Environmental Efficiency

Since the 90 s of the last century, international capital flows have been extremely active and the world economy enters a period of rapid development. Foreign direct investment is an important form of international capital flows, and it is also promoting China's economic development as an i mportant factor since the reform and opening up. The increasingly serious environmental problems, make us began to realize the importance of sustainable economic development, and we gradually put forward the guiding ideologies like "sustainable development strategy" and "scientific development". As a result, environmental issues have caused wide public concern. And a large number of studies have shown that, China's environmental problems are related, not only to the extensive development mode which has been in China for a long time, but also to local governments' actions, such as the blind introduction of foreign direct investment s and reduction of environmental regulation. Therefore, to clarify the logic behind the formation of environmental problems will be with valuable theoretical and show significance.To comprehensively measure the quality of the environment in our country, this paper introduces the environmental efficiency to evaluate the actual pollution and potential pollution levels, which is estim ated by comprehensive pollution index of environment and using Super SBM-V model. Firstly, this paper analyzes the current situation of foreign direct investment,fiscal decentralization and environment in China, specifics regional differences from the eas t region, the central region and the west region, and shows the situation of environmental pollution and governance. Secondly, through a brief review of environmental externality theory, the theory of foreign direct investment and environmental efficiency, and multi-task principal-agent model, this paper analyzes the behavior of fiscal policy options for local government, and draws relevant conclusions.Finally, based on a sample of 109 Chinese cities during 2002-2010, this paper attempts to empirically stud y the impact of foreign direct Investment and fiscal decentralization on environmental efficiency by using GMM method.The estimated results show that foreign direct Investment and fiscal decentralization have significant positive effects. Regionally, the positive effect of foreign direct investment and onthe fiscal decentralization on environmental efficiency is the most obvious in the west region. Every region is significantly different. Considering the different effects of human capital, economic develo pment and population density on the environmental efficiency regionally, this paper puts forward the following suggestions: Firstly, the cities should introduce appropriate amount of foreign investment, and carry out the effective monitoring to the quality of foreign investment. About the scale of attracting foreign capital, the larger it is in the west and middle region, the better for its sustainable development. But for the central and east region, based on existing investment scale, we should pay more a ttention to the quality of foreign investment, and attract foreign capital reasonably. Secondly, improve the level of fiscal decentralization in every city, strengthen the supervision of government behavior, and promote the development of regional economy. Due to the high decentralization of current fiscal expenditure, reform the local government assessment mechanism, establish the perfect green GDP assessment system as soon as possible. Finally, the central and local governments should increase the investm ent of human capital and improve the quality of the people; strengthen the propaganda of environmental protection and enhance the awareness of environmental protection; promote and develop more environmentally friendly technologies, and let more people participate in environmental protection career.