Foreign Direct Investment and Haze Pollution Governance in China-Analysis from the Perspective of Factor Market Distortion

Abstract

Abstract: Combining rent-seeking theory with local government competition theory, taking the interaction between foreign companies and local governments as the starting point, this paper constructs a logical framework of "FDI-factor market distortion-haze pollution", based on China's urban panel data from 2004 to 2018, this paper constructs a dynamic spatial Dubin model and a spatial simultaneous equation model to test hypothesis. The research finds that:(1) FDI not only reduces haze pollution through industrial structure upgrade, environmental technology spillover (intra-regional or interregional), and spatial spillover originating from the division of global value chains, but also intensifies haze pollution through factor market distortion(intra-regional or interregional) and economic scale. Ultimately, FDI is conducive to haze management; (2) In order to attract FDI, local governments have a "bottom-to-bottom competition" in the factor market, exacerbating the distortion of the factor market; (3) Factor market distortion weakens the industrial structure upgrade effect and environmental technology spillover effect of FDI, and stimulates its economic growth effect, which is not conducive to exerting its positive effect in reducing haze pollution; (4) Haze pollution has significant path-dependent characteristics and space spillover effect, and inhibits the inflow of FDI that prefers high-quality environment.

Key words: FDI, factor market distortion, haze pollution governance, spatial simultaneous equation model

CLC Number:

F205

ZHOU Jie-qi, LIU Sheng-long. Foreign Direct Investment and Haze Pollution Governance in China-Analysis from the Perspective of Factor Market Distortion[J]. Journal of Guizhou University of Finance and Economics, 2020(05): 88-99.

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