Research On The Impact Of Two-way FDI On Green Total Factor Productivity

In recent years,as China’s economy has grown rapidly,the severe resource and environmental problems have become increasingly prominent.Despite the deployment of various measures to achieve green transformation,as a global polluter,China still faces great domestic and international environmental pressure.The report of the 20 th National Congress of the Communist Party of China proposed to adhere to high-quality development,and green growth has become a universal form of economic growth,while the improvement of green productivity has become an important indicator of healthy and green economic development,which is an important standard for measuring high-quality development.At the same time,with the implementation of the "going out and bringing in" strategy,China,as a major country of both inward and outward investment,has fully opened up and linked internal and external development,becoming a necessary path for economic growth.Currently,China’s focus on opening up to the outside world is to achieve a combination of "bringing in" and "going out".With the steady advancement of this policy,China’s level of utilization of foreign investment(IFDI)and outward foreign direct investment(OFDI)continues to improve,gradually becoming an important channel for promoting economic growth and productivity improvement.Therefore,under the background of China’s slowing economic growth and the urgent need to find new driving forces for real economic growth,it is particularly important to study the relationship between openness to the outside world and green total factor productivity(GTFP),which can provide reference for research on the path of achieving highquality economic development.This study raises the following question: Will China’s inward foreign direct investment(IFDI)and outward foreign direct investment(OFDI)affect green total factor productivity(GTFP)? Through what channels will they affect it? Will there be differences due to regional characteristics? Furthermore,if we only study the effects of IFDI and OFDI on GTFP in isolation,without considering their synergistic development,we cannot fully investigate their true impact on GTFP.Therefore,is there a relationship between the synergy of China’s twoway FDI and GTFP? Answering these questions will have important theoretical and practical implications for China to develop more efficient and reasonable opening-up policies to promote green transformation.This thesis examines the GTFP enhancement effect of two-way FDI using a combination of theoretical and empirical systematic tests.In terms of theoretical analysis,based on the nature of GTFP,the relationship between two-way FDI and green total factor productivity is systematically sorted out based on various dimensions such as externality theory,the environmental Kuznets curve,the "pollution refuge" hypothesis and the "pollution halo" hypothesis.Based on the Externality theory,the environmental Kuznets curve,the "pollution refuge" hypothesis and the "pollution halo" hypothesis,the theoretical relationship between two-way FDI and GTFP is systematically reviewed,and the literature is reviewed.In the empirical analysis part,this study selects data from 279 prefecture-level cities in China from 2004-2019 as the research sample,g constructs a two-way fixed-effects model and a mediating-effects model to test the mechanism of two-way FDI affecting green total factor productivity.The empirical results show that:(1)Both IFDI and OFDI drive GTFP,and the findings remain robust after considering a series of robustness tests including substitution of key variables,time trends,other policy disturbances and endogeneity treatments.(2)Mechanism Analysis suggests that the productivity-enhancing effect of two-way FDI is mainly achieved through improving capital and labor mismatches.(3)The heterogeneity analysis finds that two-way FDI has a more significant impact in coastal regions,and that twoway FDI that relies on low natural resource dependence,high marketisation and environmental emphasis plays a stronger role.(4)The quantile regression indicates that two-way FDI has a stronger contribution to the improvement of GTFP in cities that are in the middle level.Further taking into account the synergy of two-way FDI,discussion reveals that the coordinated development of two-way FDI also plays a positive role in enhancing the green development of the region.Based on the above empirical findings,this thesis proposes the following policy recommendations: First,further strengthen opening up and pursue the dual strategies of "bringing in" and "going out".Given the increasing uncertainty in the current international environment,especially the serious impact of the COVID-19 pandemic on international trade and investment,it is important for China,in its economic transformation,to adhere to the policy of opening up to obtain advanced foreign technologies,promote international cooperation,and achieve high-quality economic development.Second,both IFDI and OFDI can promote GTFP by alleviating the mismatch between labor and capital resources.This resource mismatch is related to both imperfect market systems and inappropriate government intervention.Therefore,it is necessary to improve the market system to fully unleash the decisive role of the market in resource allocation,while reducing inappropriate government intervention.This will enable the smooth flow of production factors across regions and industries,releasing factors from inefficient supply.Third,focus on industry differentiation and guide the flow of capital through the formulation of differentiated policies to achieve industrial restructuring.We should give full play to the leading role of the service industry and continue to expand the degree of opening up of the service industry to the outside world based on the existing opening policy.At the same time,it will accelerate the synergistic development of service and manufacturing industries,enhance the position of the whole industrial chain in the global division of labor,and finally realize the transformation and upgrading of industrial structure.Fourth,attention should be paid to regional differences to ensure that the development of bilateral FDI is consistent with local economic,social,and environmental development.Given the differences in geographical location,industrial advantages,and investment flows,local governments should provide appropriate policy guidance based on local characteristics.