Can FDI facilitate green total factor productivity in China? Evidence from regional diversity

Abstract

The development of foreign direct investment conforms to the theoretical principles of green total factor productivity and is key to promoting regional industry upgrading. Using three-stage data envelopment analysis (DEA) based on city-level data, this paper investigates the effect of foreign direct investment on regional green total factor productivity (GTFP) across China. The results show that foreign direct investment affects regional GTFP through technology spillover effect and human capital spillover effect. Under different environmental regulation intensity and marketization, the relationship between FDI and green total factor productivity is non-linear. The phenomena of “pollution paradise” and “bottom line race” survived at low marketization regional and foreign direct investment will inhibit the improvement of regional green total factor productivity in China.