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2010•SSRN Electronic JournalOpen access

The Impact of FDI on Air Quality: Evidence from China

Berna Kirkulak-Uludag, Qiu Bin, Wei Yin

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Abstract

This paper examines the impact of FDI investment on air pollution in China using 286 cities from 2001 through 2007. This paper provides a better understanding of economic growth and foreign investment while maintaining a sustainable environment. In order to achieve this task, the current paper tests whether or not FDI inflow has impact on environmental deterioration in particular on air quality. Our findings do not support pollution haven hypothesis for China. The findings show that FDI has no negative impact on the air quality in China. Contrary to expectations, the presence of FDI investment reduces the air pollution. This can be explained by the technology that FDI brings to China.

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What this paper is about

This paper examines the impact of FDI investment on air pollution in China using 286 cities from 2001 through 2007. This paper provides a better understanding of economic growth and foreign investment while maintaining a sustainable environment. In order to achieve this task, the current paper tests whether or not FDI inflow has impact on environmental deterioration in particular on air quality. Our findings do not support pollution haven hypothesis for China. The findings show that FDI has no negative impact on the air quality in China. Contrary to expectations, the presence of FDI investment reduces the air pollution. This can be explained by the technology that FDI brings to China.

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Available abstract

This paper examines the impact of FDI investment on air pollution in China using 286 cities from 2001 through 2007. This paper provides a better understanding of economic growth and foreign investment while maintaining a sustainable environment. In order to achieve this task, the current paper tests whether or not FDI inflow has impact on environmental deterioration in particular on air quality. Our findings do not support pollution haven hypothesis for China. The findings show that FDI has no negative impact on the air quality in China. Contrary to expectations, the presence of FDI investment reduces the air pollution. This can be explained by the technology that FDI brings to China.

Key concepts: Foreign direct investment, China, Air quality index, Order (exchange), Pollution haven hypothesis, Air pollution, International economics, Haven

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