Does diversified environmental regulation make FDI cleaner and more beneficial to China's green growth?

Does foreign direct investment influence carbon emission-related environmental problems? Contextual evidence from developing countries across Sub-Saharan Africa

Sub-Saharan African nations face multifaceted environmental problems, especially those associated with carbon discharges. Hence, this study calculates a composite carbon index in the context of 39 developing nations from this region and uses it as a proxy for the carbon emission-related environmental problems they have faced during the 2000-2020 period. This index is estimated by utilizing data regarding annual carbon dioxide discharges, output-based carbon productivity rates, and energy consumption-based carbon intensity levels in the concerned countries. Hence, policy takeaways from this study have critical relevance for the selected sub-Saharan African nations to help them achieve the objectives related to the Sustainable Development Goals agenda and the Paris Accord. Overall, the findings from the econometric analyses verify that more receipt of foreign direct investment initially raises but later on reduces environmental problems. Thus, the nexus concerning these variables depicts an inverse U-shape. Besides, the results endorse that greening the energy consumption structures of the sampled sub-Saharan African countries helps to abate their environmental problems in the long run while financial development aggravates the extent of environmental adversities that take place. Lastly, improving the quality of regulatory agencies enables the Sub-Saharan African nations to further mitigate their environmental problems. Moreover, these aforementioned findings are observed to be heterogeneous across low- and middle-income categories of the selected Sub-Saharan African countries. Furthermore, the heterogeneity of the findings is also confirmed by the outcomes derived from the country-specific analyses. Nevertheless, these nations should attract clean energy-embodying foreign direct investment, make their energy consumption structures greener by amplifying renewable energy adoption rates, introduce green funds to develop their financial sectors, and make their environmental regulatory agencies more transparent with their activities.

Low carbon city and FDI inflows: evidence from China

Achieving the goals of "carbon peaking" and "carbon neutrality" becomes one of the important elements of the ecological civilization strategy in China. Based on the strong balanced panel data of 281 prefecture-level cities in China from 2006 to 2019, we investigate the impact of Low-carbon city pilot policy (LCCP policy) on FDI inflows by using the multi-period DID model and intermediary model. After that, we discuss the heterogenous impact in terms of both policy tools and geographic locations. Furthermore, we investigate the spillover effects of the LCCP policy on the FDI inflows of surrounding cities using the Spatial Dubin DID model. The results show that (1) the LCCP policy can significantly attract FDI through reducing compliance costs and promoting technological innovation, and the Bacon decomposition and the placebo test show that the estimation error is small and the regression result is relatively stable; (2) command-mandatory tools have negative effects on FDI, while market-oriented tools can effectively attract FDI in pilot cities, but voluntary tools have no significant effect on FDI in pilot cities; (3) the LCCP policy can significantly promote the inflows of FDI in the eastern and western regions, but it does not significantly promote the FDI in central regions; (4) there is a positive spillover effect on FDI inflows to surrounding cities.

Does the depth of the Financial Markets matter for establishing Green Growth? Assessing Financial sector's potency in decoupling Economic Growth and Environmental Pollution

China's 2060 carbon neutrality agenda requires implementation of policies that can decouple its economic growth from environmental pollution. Consequently, establishing green growth in the Chinese economy is of utmost significance. Against this milieu, this study questions whether the depth of Chinese financial markets matters for establishing green growth in China. Besides, the green growth effects of renewable energy use, technological innovation, and urbanization are also examined. Accordingly, quarterly frequency data from 1990Q1 to 2020Q4 are utilized to perform econometric tests that accommodate structural break concerns in data. Overall, the findings reveal that the depth of the Chinese financial markets facilitates the prospects of greening the Chinese economy. Notably, deepening of financial markets is seen to initially inhibit green growth while stimulating it later on; thus, the financial markets' depth-green growth nexus is evidenced to depict a U-shape. On the other hand, green growth in China is also found to be catalyzed by the renewable transformation of the Chinese energy sector and through technological innovation in the long-run. Conversely, urbanization is witnessed to inflict anti-green growth impacts. Furthermore, the causality analysis verifies bi-directional causal associations between renewable energy use and green growth while unidirectional causalities running from financial markets' deepening, technological innovation, and urbanization to green growth are also discovered. Therefore, it is recommended that China should try to persistently develop its stock and debt markets so that clean investment can be boosted to decouple economic growth and environmental pollution. Besides, it is also important to undergo renewable energy transition, develop clean technologies, and design low-energy urbanization strategies.

Innovation city and low-carbon future: a quasinatural experiment from China

Using the difference-in-difference model and panel data from 283 Chinese cities from 2006 to 2019, this study assesses the effect on CO2 emissions of an innovative city pilot policy and analyzes its mechanism using the mediation effect model. The findings demonstrate that the pilot policy significantly reduces urban carbon emissions overall, and this finding holds even after conducting several stability tests. Innovative pilot cities can cut carbon emissions by 11.5% compared to nonpilot cities and thus significantly impact carbon reduction. Reducing carbon emissions is possible through three mechanisms. These are the enrichment of cultural resources, the development of technological innovation levels, and the optimization of industrial structure. There is a significant lag in how the innovative city pilot policy affects this reduction. The emission reduction effects of innovative pilot policies on different pollution levels, regions, and cities of various sizes are heterogeneous. In the long run, the scope of pilot projects needs enlargement in an orderly manner, and specific policies should be implemented according to local conditions. Meanwhile, advanced technologies are required in cities of different scales to build innovative development mechanisms for carbon peaking and carbon neutrality, and environmental regulations should be strengthened to implement in urban areas the concept of green and sustainable ecological development.

Financial deepening, financial innovation, and education as new determinants of green growth in China

To address the issue of global warming, the agreed solution is to reduce GHG emissions. The plausible solution to reduce GHG emissions is to follow a green growth strategy that refers to the complete decoupling of economic growth from its environmental impact through the sustainable utilization of natural resources. Consistent with this view, this study investigates the impact of financial deepening, financial innovation, and education on green growth in China from 1996 to 2020. The empirical analysis of the model is conducted through quantile ARDL. The long-run estimated coefficients of financial institution deepening are positively significant across most quantiles, whereas the estimated coefficients of financial market deepening are positively significant in almost half quantiles. These results imply that the financial deepening of both financial markets and institutions can positively contribute to green growth. However, the estimates of financial innovations are significant and positive in higher quantiles, implying that financial innovation only contributes to the green when the rate of financial innovation is too high. The estimates of education are positively significant at higher quantiles. Our study highlights various policy suggestions that are aimed at instigating sustainable green growth in China.

Green merger and acquisition decision driven by environmental regulation and its impact on green innovation: evidence from Chinese heavily polluting listed enterprises

How heavily polluting enterprises achieve sustainable development has become an urgent issue to be solved. Based on the data of Chinese heavily polluting listed enterprises during the period of 2010-2020, this paper adopts the probit method to examine how heterogeneous environmental regulations affect green merger and acquisition (GMA) decision, and propensity score matching and difference-in-differences method to explore innovation performance of GMA. The findings are as follows: (1) Command-and-control environmental regulation (CMCER) can promote GMA, while there exists a U-shaped relationship between market-based environmental regulation (MBER) and GMA; (2) from a dynamic perspective, it turns out that GMA can promote green innovation (GI) in the first and second post-acquisition year, but this effect disappears in the third year; (3) compared with CMCER, MBER has a more pronounced positive effect on the relationship between GMA and GI; (4) heterogeneous analysis indicates that the above GMA performance is more persistent when the acquirer is state-owned, with high media attention, with high internal control or engages in vertical GMA. The findings further enrich the literature on GMA driver and performance and provide references for optimizing ER policies and promoting corporate sustainable development.

Does fiscal decentralization support green economy development? Evidence from China

China, as the world's largest energy consumer, has made the green economy a central component of its economic development strategy. However, how to effectively play the government's crucial role in promoting the development of the green economy has become the focus of research by a significant number of economic experts. This paper uses the Super-SBM model to measure the green economy development index by introducing carbon dioxide emissions and industrial "three wastes" emissions and analyzes the relationship between fiscal decentralization, green technology innovation, and the green economy from the vantage point of local government behavior. It is discovered that fiscal decentralization significantly inhibits the development of the green economy, and local green technology innovation activities in the last period will amplify this negative impact. The above findings pass the robustness test. After introducing comparative analysis of economic growth indicators that are measured by the stochastic frontier analysis (SFA), the results show that only in the eastern region does fiscal decentralization both drive economic growth and do not inhibit green economy development by local government officials' political promotion motives and self-interested preferred expenditures, but overall economic promotion and green economy inhibition caused by fiscal decentralization exist simultaneously in the Yangtze River Economic Belt region, and significant heterogeneity differences exist in the rest of the regions. The findings suggest that regulating local government fiscal behavior and improving fiscal transparency are very important to promote the development of China's green economy.

Revival of sun-and-beach tourism through the lens of regulatory and risk dimensions of environmental sustainability

Environmental sustainability is essential in tourism literature, and sun-and-beach tourism (SBT) is one of the most popular subsections of the tourism field. The appropriate policies and strategies during the COVID-19 pandemic to revive SBT growth through the lens of the regulatory dimension (RED) and risk dimension (RID) of environmental sustainability are gaining timely ground to conduct this research. The current study examined the nexus between SBT, RED, and RID utilizing three novel indexes (i.e., weighted sun-and-beach tourism index, weighted regulatory dimension index, and weighted risk dimension index) by employing the principal component analysis within the framework of six stages of empirical estimation strategy. These three novel indexes combine the most commonly used SBT, RED, and RID indicators. This research tested the CSD and homogeneous, then employed the second generation CIPS-CADF panel unit root test, used an AMG estimator, and employed the panel Toda-Yamamoto (PTY) causality test. The findings revealed that the RED positively influences SBT while the RID mitigates SBT. Results also indicate bidirectional causality between SBT, RID, and RED. In other words, changes in RID and RED have predictive power for the SBT, which further highlights the role of SBT on the RID and RED. Therefore, concerned authorities can focus on environmental sustainability design initiatives and appropriate policy/strategy implications to boost SBT.

Will China's R&D investment improve green innovation performance? An empirical study

In 2020, China's R&D investment reached 2442.6 billion RMB, and it ranks second in the world, but the performance of green innovation has not proportionately improved. The question of how to promote the improvement of green innovation performance is particularly important in order to mitigate future environmental problems and issues due to rapid development of China's economy. While past research has examined the relationship between R&D investment and green innovation, they have not explicitly considered the effect of regional technological innovation level on this relationship. Hence, we fill this gap by exploring the relationship between R&D investment and green innovation performance using data from various regions in China from 2015 to 2019, under the effect of a threshold variable, namely, technological innovation. We explore the impact of economic development level, environmental regulation level, foreign direct investment, and science and technology in fiscal expenditures on green innovation performance. The empirical results show that when the regional technological innovation level is used as the threshold variable, the R&D investment has a significant double-threshold effect with the lagging three-phase green innovation performance. When the technological innovation level is low (< 0.1082), R&D investment has a negative impact on green innovation performance. Moreover, when the technological innovation level is high (>0.5837), the impact of regional R&D investment on green innovation performance is sub-optimal. Consequently, the range of [0.1082 to 0.5837] is the best range for the positive impact of R&D investment on green innovation performance. Furthermore, among China's 30 provinces and cities, 24% (mostly areas located in the southwest and northeast of China) have the technological innovation level in the optimal range. Our results help explain the current status of China's R&D investment and green innovation development, and provide a theoretical basis for the formulation of government innovation investment policies.

Environmental courts and foreign direct investments: evidence from China

As China's pollution problems worsen, environmental disputes are increasing rapidly. However, only 1% of environmental disputes can be resolved via judicial channels. Based on the establishment of environmental courts since 2007, we employ the multi-period DID approach to investigate the impact of environmental courts on foreign direct investments. We find that (1) compared with cities without environmental courts, FDI of cities with environmental courts would drop by 3.32% from the average, which is consistent with the pollution haven hypothesis. Besides, we verify the credibility of the conclusion through detailed endogeneity discussions, placebo tests, and robustness tests. (2) The negative effect of environmental courts on foreign direct investments is more salient in the east, regions with higher historical environmental investment, and regions with more serious local protectionism. (3) There are two channels. The greater risks of environmental litigation and stricter environmental public supervision brought by environmental courts would lead to additional environmental violation costs, thereby inhibiting foreign direct investments. Our findings provide new causal evidence for the pollution haven hypothesis from the perspective of intensive environmental justice.

Does FDI improve green total factor energy efficiency under heterogeneous environmental regulation? Evidence from China

Green development is a strategy for China's sustainable economic growth, and improving green total factor energy efficiency (GTFEE) is the key to achieving the dual goals of energy conservation, emission reduction, and economic development. This paper takes panel data of 267 prefecture-level cities in China from 2004 to 2019 as samples to explore how heterogeneous environmental regulation can have the effects of FDI on GTFEE. The results show that, first, except for environmental regulation and FDI independently affecting GTFEE, there is a synergistic effect between environmental regulation and FDI, and their interaction can also significantly affect GTFEE. Secondly, FDI has no significant impact on GTFEE when environmental regulation is low, but FDI can significantly improve GTFEE when environmental regulation is high. Thirdly, market-based environmental regulations (MER) have a better improvement effect on GTFEE than command-based environmental regulations (CER). Therefore, it is necessary to pay attention to the benign interaction between FDI and environmental regulation, especially giving full play to the role of market-based environmental regulation and further improving the design of command-based environmental regulation.

How are FDI and green recovery related in Southeast Asian economies?

This study is to examine how FDI and green economic growth are related in Southeast Asian economies. It also attempts to find out the role of fiscal policy development in the relationship between FDI and green growth in the economies of the region. For this purpose, a dynamic panel threshold model is used for the data over the period 2000–2018. The main results show that FDI has a positive impact on the progress of green growth in these economies, with a stronger impact in the group of Southeast Asian economies with high fiscal development. This result confirms the pollution halo hypothesis, which states that FDI can promote green growth in a country. Aligning economic priorities to improve green fiscal policies, reforming fiscal integration programs, planning for green job creation, and implementing policies to attract FDI are recommended as important policy implications over the COVID-19 period.