Impact of FDI inflows on green TFP based on carbon emissions transmission mechanism

Abstract

Economic globalization and green development have become the consensus of all countries in the world. The importance of FDI, carbon emissions and green total factor productivity is self-evident. This study analyses the impact of FDI inflows on green TFP and the role of carbon emissions in FDI inflows and green TFP. The empirical analysis employed kernel density estimation, OLS, mediation effect model, and panel quantile regression methods using China’s provincial panel data spanning over 2001–2019. The facts show that China’s carbon emissions have been reduced because of environmental regulations and green TFP is still rising in fluctuation. The results from OLS and mediation effect model indicate that the impact of FDI inflows on green TFP present an asymmetric inverted U-shape and FDI influences green TFP by changing carbon emissions. The panel quantile regression results also show that FDI has a stronger impact on green TFP in less developed regions. This paper believes that the introduction of FDI should be appropriate and should be accompanied by corresponding environmental regulations, in order to promote green TFP in countries around the world.