Foreign Direct Investment,Environmental Regulation And High-quality Economic Development

After the reform and opening up,China has achieved remarkable economic development.In the early stages of this development,foreign direct investment played a crucial role by bringing advanced technology and economic inputs to China.However,it has been acknowledged that foreign direct investment is a “double-edged sword” that promoted rapid economic growth while also causing environmental pollution.As China transitions from rapid growth to high-quality development,it is important to examine whether foreign direct investment still plays a significant role in promoting economic growth and if it has the same impact across different regions.Additionally,it is important to consider the impact of environmental regulation on high-quality economic development.As China is regulating and restricting foreign investment based on environmental policies,it is critical to investigate if foreign direct investment’s impact on high-quality economic development has undergone any changes.This paper aims to address these questions and provide insight into developing and improving the business environment for China’s economic growth in the context of economic transformation and high-quality development.In the context of China’s high-quality economic development during its economic transformation,this paper utilizes panel data from 264 prefecture-level cities from 2005 to 2019 to analyze the impact of foreign direct investment and environmental regulation on high-quality economic development.The panel entropy method is used to assess development concepts such as innovation,coordination,green development,opening up,and sharing,which were introduced in the 19 th National Congress.After conducting a spatial relationship test,the spatial Durbin model is established to investigate the role of foreign direct investment and environmental regulation in promoting high-quality economic development.Additionally,we examine the influence of environmental regulation on the impact of FDI on high-quality economic development.To ensure the robustness of the results,we conduct a robustness test by replacing the spatial weight matrix.Finally,we establish a threshold model to test the threshold effect of scientific and technological innovation on the relationship between environmental regulation and high-quality economic development.Based on the theoretical analysis and empirical results,practical policy suggestions are put forward.The findings of this paper suggest the following:Firstly,while China’s high-quality economic development has been steadily increasing,there are regional differences present.Due to their economic advantages and geographical location,the eastern coastal region outperforms the central and western regions.Additionally,the eastern region excels in the areas of innovation and opening up when compared to the central and western regions;Secondly,as China transitions towards high-quality economic development,foreign direct investment has been a significant driving force for promoting economic growth across the country.Notably,it has had a more notable impact on high-quality economic development in the Midwest region;Lastly,environmental regulations can increase production costs for foreign enterprises,potentially impacting their competitiveness and reducing investment in production-related technology research and development;Furthermore,the introduction of foreign enterprises may also cause environmental damage to the surrounding areas,which can hinder the high-quality development of the local economy.However,due to environmental regulations,foreign enterprises are forced to improve their production processes,which can have a positive spillover effect on neighboring areas,promoting high-quality economic development.In general,under the regulatory effect of environmental regulations,foreign direct investment still plays a significant role in promoting high-quality economic development;Lastly,mandatory environmental regulations prompt enterprises to upgrade their production processes,which may require different levels of funds and technologies.Regions with higher technological advancement may have more advanced and efficient production processes,making it easier for enterprises to upgrade their products.Furthermore,with improvements in scientific and technological innovation,environmental regulations have an increasingly positive impact on promoting high-quality economic development.