An Empirical Study Of The Effects Of Host Country’s Environmental Regulation On Chinese Manufacturing Listed Companies’fdi Location Selection

FDI initiated by MNC plays an increasingly important role in the rapid development and integration process of the global economic in recent years. Since Chinese officials pushed the going-out strategy, China’s foreign direct investment has entered a better stage of development, it has become an important driving force propelling global economic growth. While enjoying rapid development of economic, climate warming, exhaustion of resources and other serious environmental problem are highlighted. The situation makes people pay more attention to both economic development and the sustainable development of environment. Many countries are accelerating the construction of environment regulation. The relationship between environmental pollution, environmental policies and foreign direct investment has also become a hot topic at home and abroad.Based on the 757 firms’ actual location in 68 countries abroad which are built by 284 Chinese manufacturing listed companies from 2007 to 2012, this paper analyzes the impact of environmental regulation on multinational companies’ foreign direct investment location choice. By building a comprehensive index of the host countries’ environmental regulation, the author uses a variety methods, such as content analysis, literature summarized, and Conditional Logit. Through the quantitative analysis of 51746 samples by Stata12.0, this paper empirical analyze and tests the impact of host countries’ environmental regulation as well as other factors on multinational companies built by China, the paper also discusses which countries are more likely to constitute pollution havens.The result indicates that a more stringent environmental regulation in these countries attracts FDI, it shows that the location choice of the most polluting firms appears to be more sensitive to the stringency of the host country’s environmental regulation. The research shows that for developed counties, a more stringent environmental regulation in these countries attracts FDI. On the contrary, the negative strongly significant interaction term for developing countries and emerging countries confirm a pollution haven effect for these country groups.Based on the above conclusions, the study proposes the policy suggestions that the reasonable way of building environmental regulation and attracting foreign capital, the paper also provides practical experience and empirical support for multinational companies’ location choice which are implementing the strategy of going out in China.