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Foreign direct investment, governance, and the environment in China: regional dimensions

Zhang, Jing (2008)
Ph.D. thesis, University of Birmingham.

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Abstract

This thesis includes four empirical studies related to foreign direct investment (FDI), governance, economic growth and the environment. We firstly investigate the existence of the so called pollution haven hypothesis (PHH) in China, i.e. the impact of regional environmental regulations (ER) on FDI inflows. We then examine the other determinants of FDI: regional government effort to tackle corruption and government efficiency. It then extends the methodology of the first two studies and revisits the PHH issues by treating ER as endogenous. Finally, we observe the effects of economic growth and foreign direct investment on the environmental quality across Chinese cities. After addressing the weaknesses in previous literature, our findings provide the following results. First, an intra-country pollution haven effect does exist in China. Such an effect is also found when ER is treated as endogenous but not robust for the sensitivity checks using different instrumental variables and estimators. Second, FDI is attracted to regions that have made more effort on fighting against corruption and that have more efficient government. Third, government variables do not have a significant impact on ER. Fourth, economic growth has a negative effect on environmental quality at current income levels in China. Finally, foreign investment has positive effects on water pollutants and a neutral effect on air pollutants. Such effects vary across pollutants and investment from different sources.

Type of Work:Ph.D. thesis.
Supervisor(s):Elliott, Robert and Cole, Matthew A. (1970-)
School/Faculty:Schools (1998 to 2008) > School of Social Science
Department:Department of Economics
Additional Information:

Material from Chapter 2 was published as Zhang, Jing and Fu, Xiaolan, "FDI and Environmental Regulations in China", Journal of the Asia Pacific Economy, Volume 13, Issue 3 August 2008 , pages 332 - 353 DOI: 10.1080/13547860802131326 2

Keywords:Foreign Direct Investment, Governance, Corruption, Environmental Regulations, Environment, Pollution Haven Hypothesis.
Subjects:HG Finance
Institution:University of Birmingham
Library Catalogue:Check for printed version of this thesis
ID Code:152
This unpublished thesis/dissertation is copyright of the author and/or third parties. The intellectual property rights of the author or third parties in respect of this work are as defined by The Copyright Designs and Patents Act 1988 or as modified by any successor legislation. Any use made of information contained in this thesis/dissertation must be in accordance with that legislation and must be properly acknowledged. Further distribution or reproduction in any format is prohibited without the permission of the copyright holder.
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