Research On The Influence Of Environmental Regulation On FDI Location Selection In Jiangsu Province

Increasing FDI has flowed into China with the continuous progress of economic globalization since China introduced the basic national policy of reform and opening up in 1978.Therefore,foreign capital plays an important role in the development of China’s economy,but it also destroys the ecological environment.However,the environment and economic development are not opposite but closely linked,and economic development must not be at the expense of environmental qualityThe traditional theory of international direct investment holds that many factors will affect the location of foreign-funded enterprises,such as the economic development level of the host country,the size of consumption market,trade cost and so on.In recent years,increasing scholars began to study the impact of environmental regulation on the location of foreign enterprises.For a long time,Jiangsu province has been a major province on attracting foreign investment in China,so it is of practical significance to analyze the differences in location distribution of foreign investment in Jiangsu province and grasp the mechanism of how the location selection of FDI is affected by factors.This article analyzes the theories of environmental regulation and FDI firstly,and then empirically analyzes the effects of environmental regulation on FDI from the perspectives of Jiangsu province as,South Jiangsu,Central Jiangsu and North Jiangsu with using regression models.This article uses literature and empirical analysis to examine the direction of FDI influenced by the intensity of environmental regulation in Jiangsu province.It firstly sorts out the domestic and foreign research status of the impact of environmental regulation on FDI location selection and clarifies the basic concepts and related theories,and analyzes the impact mechanism of environmental regulation on FDI location selection.Then,it analyzes the current situation of FDI and environmental pollution in Jiangsu province,South Jiangsu,Central Jiangsu and North Jiangsu,and uses the method of comprehensive index to measure the intensity of environmental regulation in Jiangsu province and various regions,and analyzes the current situation of environmental regulation.Then,FDI location selection and environmental regulation is respectively as explained variables and explanatory variables,and the host country’s level of economic development,labor costs,the degree of marketization,infrastructure are as control variables.Based on the related theories and the analysis of the current situation,this article builds a model that environmental regulations affect FDI location choice to analyse the situation in Jiangsu province,South Jiangsu,Central Jiangsu and North Jiangsu by the regression model to empirical analysis.Finally,on the basis of theory,the author puts forward some feasible suggestions according to the research conclusion.Firstly,it is found that Jiangsu province has not become a "Pollution Refuge" for polluting FDI,and that high-intensity environmental regulation is conducive to Jiangsu province to attract FDI through empirical analysis.The improvement of environmental regulation level will not offset the comparative advantages brought by other factors such as the level of economic development and trade openness.Secondly,the increase of the intensity of environmental regulation is conducive to the "Rising in quantity and quality"of FDI attracted by South Jiangsu.The improvement of reasonable labor cost,economic development level and infrastructure is conducive to attracting foreign-funded enterprises.Thirdly,for Central Jiangsu,the rising cost of environmental factors has no significant impact on the region.Factors such as the degree of marketization and trade openness are the main advantages in attracting FDI.Fourthly,for North Jiangsu,the rising cost of environmental governance has no significant impact on FDI,and the degree of industrial clusters,infrastructure improvement and trade openness are the main influencing factors for FDI location selection.The suggestions are mainly put forward from two aspects.Firstly,the policy suggestions on Jiangsu are to improve the"Environmental Threshold" for FDI,establish appropriate environmental standards,and improve the ability of the government to supervise the environment,continue to attract foreign investment at the same time to re-evaluate their comparative advantages,and balance the distribution of foreign capital in Jiangsu;Secondly,the suggestions on three the regional level include:South Jiangsu needs to create a fair market environment to prevent foreign enterprises from crowding out local enterprises;Central Jiangsu needs to improve the degree of marketization;North Jiangsu needs to continue to improve the degree of industrial clusters and improve infrastructure.