Environmental Regulation,Tax Burden,and Location Choice Of OFDI

In the past,in order to seek economic development,the rough development mode has caused great damage to the earth’s environment.Governments have recognized the seriousness of the environmental pollution problem and actively implemented policies to reduce pollution emissions.During the period of the 11 th Five Year Plan(2006-2010),the central government introduced a quantified environmental policy,which included reducing emissions of SO2 and COD.However,there are still questions about the effectiveness of environmental regulation of the 11 th Five Year Plan.Some scholars(Wu et al.,2017)have shown that in order to reduce emission reduction costs,polluters chose to invest in western regions with low environmental regulations,which increased environmental pressure in western regions of China.Then under the environmental regulation of the 11 th Five Year Plan,whether enterprises will tend to abroad,this is the issue to be studied in this paper.Through the study of domestic literature,it is found that most focuses on the impact of environmental regulation on the location choice of FDI,and there are few literatures that study the relationship between China’s environmental regulation and location choice of OFDI.This paper studies the OFDI data from 2006 to 2013,with conditional logit model and relatively exogenous environmental regulation of the11 th Five Year Plan and the 12 th Five Year Plan,not only can test the effectiveness of the policy around the world,but also make a supplement for related literature research in China.This paper also innovatively considers that the location choice of enterprises is not only affected by the endowment of the investing country,but also by the endowment of the parent company’s locality.Therefore,all the influencing factor indicators used in this paper are the difference between the adjusted index of the parent company’s province and the index of the investing country.In addition,this paper also focuses on the offsetting effect of tax burden on the location selection effect of enterprises under environmental regulation,so as to provide suggestions for the implementation of relevant policies.Research on this issue can be divided into two camps,one is the "polluted paradise hypothesis",the other is the "Porter hypothesis".This article,through the empirical study,found that: environmental policy of the 11 th Five Year Plan don’t encouraged companies to invest overseas,on the contrary,compared with the pursuit of low emission cost under low environmental regulation,the enterprise is much willing to develop clean technology,shows that the environmental policy of the 11 th Five Year Policy is valid worldwide,and supports the “Porter hypothesis”;And only enterprises in the eastern region,especially those with light pollution,are more inclined to pursue clean technologies through study of divided sample.At the same time,companies have an incentive to avoid taxes,which can hinder the pursuit of clean technology.In addition,officials in the eastern region may face greater pressure for economic growth.In order to achieve the local economic growth target,they will possibly reduce their own environmental standards to the maximum extent.They believe that low environmental standards can attract more investment.In this regard,we suggest that we should unswervingly implement environmental protection policies,At the same time,raise the awareness of environmental protection in the whole society.we should also improve environmental protection supporting measures,such as improving tax support,investment policy,evaluation and investigation mechanism of implementation,and support the development of environmental research projects.