Research On The Impact Of Foreign Direct Investment On Environmental Quality

With the continuous deepening of opening,foreign direct investment has become an important method of international capital cooperation,which has effectively promoted the economic growth of the host country and the flow of capital on a global scale.The concept of“Belt and Road”was put forward for the first time in 2013,but now it has not only greatly promoted the economic development of countries along the“Belt and Road”,but also has formed a new region for economic and trade cooperation.While FDI promotes infrastructure construction and rapid economic development,it will also bring about a series of environmental problems.Only by researching on the impact of FDI on the environmental quality of countries along the“Belt and Road”and fully understanding the relationship between FDI and environmental quality can we better promote the"Belt and Road"countries’construction and economic cooperation,which will let economic development and the ecological environment go ahead hand in hand.After reviewing the relevant literature,we can see that there are three views of FDI’s impact on environmental quality:positive,negative,and uncertain effects.FDI is mainly through three different mechanisms affecting the environmental quality,including scale effects,structural effects,and technical effects.This article analyzes the environmental effects of FDI by the Pollution Paradise Hypothesis,Pollution Halo Hypothesis and Environmental Kuznets Curve,based on which summarizes the influencing factors and mechanisms of FDI environmental effects.This paper takes the 2008-2018 panel data of 58 countries along the“Belt and Road”as the research object,analyzes the characteristics and the current status of FDI and environmental quality in the“Belt and Road”region.The environmental quality referred to in this article specifically refers to the atmospheric environmental quality.We create environmental quality index to represent the environmental quality level of a country by calculating the comprehensive environmental quality score,to which we select the per capita PM2.5 exposure,CO,CO₂,SO₂,and NO₂emissions according to the“Ambient Air Quality Standards”issued by the Ministry of Commerce.From 2008 to 2018,the annual FDI inflow in the“Belt and Road”region has shown a downward trend.However,it still has a relatively large scale and strong ability to attract investment compared with the level of investment in the world.The emission trends of air pollutants are different.Per capita PM2.5 exposure,CO emissions,and SO₂emissions show a downward trend,while CO₂and NO₂emissions show an overall upward trend,and the overall environmental quality scores of different regions vary greatly.From the results of empirical analysis,the FDI of countries along the“Belt and Road”has a significantly negative impact on environmental quality,that is,the inflow of FDI will increase the discharge of pollutants and deteriorate the environmental quality of the host country,which confirms the“Pollution Paradise Hypothesis”.From the analysis of the"three effects",it is found that the current FDI environmental scale effect and technical effect of the countries along the"Belt and Road"are negative,and the structural effect is positive,indicating that the countries along the"Belt and Road"are currently emitting a large amount of pollutants in the process of economic development,resulting in the decline in environmental quality.Clean technologies account for a relatively small proportion among the introduced technologies,so even though it introducts a lot of technologies,it still dosen’t reduce the emission of environmental pollutants.Because it consumes more resources to support production needs as well as expands the scale of production.However,the inflow of FDI has promoted optimization and upgrading of local industrial structure.At the same time,this paper confirms the existence of heterogeneity of FDI’s impact on environmental quality.FDI has different environmental impacts on countries with different environmental quality and different economic scales with which its scale effect and technological effect have changed.But the structural effect of FDI is always significantly positive in all kinds of situation.Based on the results of empirical analysis,this article finally puts forward corresponding policy recommendations for promoting the coordinated and sustainable development of FDI and environmental quality in countries along the“Belt and Road”.