TY - JOUR
T1 - Foreign direct investment, institutional development, and environmental externalities
T2 - Evidence from China
AU - Wang, Danny T.
AU - Chen, Wendy Y.
N1 - Funding Information:
The authors gratefully acknowledge comments from Jie He, Klaus Meyer, Mike Peng, Liang Shao, David Tse, Shui Ki Wan, and Bennett Yim. This study was supported by General Research Funds from the Research Grants Council, Hong Kong SAR Government (Project no. HKBU 752809).
PY - 2014/3/15
Y1 - 2014/3/15
N2 - The question of how foreign direct investment (FDI) affects a host country's natural environment has generated much debate but little consensus. Building on an institution-based theory, this article examines how the institutional development of a host setting affects the degree of FDI-related environmental externalities in China (specifically, industrial sulfur dioxide emissions). With a panel data set of 287 Chinese cities, over the period 2002-2009, this study reveals that FDI in general induces negative environmental externalities. Investments from OECD countries increase sulfur dioxide emissions, whereas FDI from Hong Kong, Macau, and Taiwan shows no significant effect. Institutional development reduces the impacts of FDI across the board. By focusing on the moderating role of institutions, this study sheds new light on the long-debated relationships among FDI, institutions, and the environments of the host countries.
AB - The question of how foreign direct investment (FDI) affects a host country's natural environment has generated much debate but little consensus. Building on an institution-based theory, this article examines how the institutional development of a host setting affects the degree of FDI-related environmental externalities in China (specifically, industrial sulfur dioxide emissions). With a panel data set of 287 Chinese cities, over the period 2002-2009, this study reveals that FDI in general induces negative environmental externalities. Investments from OECD countries increase sulfur dioxide emissions, whereas FDI from Hong Kong, Macau, and Taiwan shows no significant effect. Institutional development reduces the impacts of FDI across the board. By focusing on the moderating role of institutions, this study sheds new light on the long-debated relationships among FDI, institutions, and the environments of the host countries.
KW - Foreign direct investment
KW - Institutional development
KW - Environmental externalities
KW - Industrial sulfur dioxide emission
KW - China
UR - http://www.scopus.com/inward/record.url?scp=84893821312&partnerID=8YFLogxK
U2 - 10.1016/j.jenvman.2014.01.013
DO - 10.1016/j.jenvman.2014.01.013
M3 - Journal article
C2 - 24525078
AN - SCOPUS:84893821312
SN - 0301-4797
VL - 135
SP - 81
EP - 90
JO - Journal of Environmental Management
JF - Journal of Environmental Management
ER -