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Green outward foreign direct investment and host country environmental effects: The home country's carbon emission reduction system is crucial

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  • Zhao, Jinjing
  • Pan, Jie
  • Xie, Xiangwei
  • Su, Miao

Abstract

Studies on the environmental impacts of outward foreign direct investment (OFDI) with less attention paid to the relationship between gradually increasing green investment and carbon emissions in the host countries. Based on the background of global carbon emission reduction, this study constructs a STIRPAT and difference-in-differences model to analyze the environmental effects of China's OFDI in ASEAN countries using unique enterprise-level data of China's OFDI from 2005 to 2020. The results show that the impact of Chinese OFDI on carbon emissions in ASEAN countries varies with the investment sector, the home country's enterprise ownership type, and environmental policy. China's green OFDI shows a clear “Pollution Halo” effect regarding investment sectors. However, the “Pollution Halo” effect of green OFDI by Chinese state-owned enterprises (SOEs) is more pronounced when considering the home country's enterprise ownership type. In addition, from the home country's environmental policy perspective, implementing China's domestic low-carbon pilot policy has a “Pollution Haven” effect on host countries. This study provides policy implications to promote the green transformation of Chinese OFDI and carbon emission reduction in ASEAN countries.

Suggested Citation

  • Zhao, Jinjing & Pan, Jie & Xie, Xiangwei & Su, Miao, 2024. "Green outward foreign direct investment and host country environmental effects: The home country's carbon emission reduction system is crucial," Energy, Elsevier, vol. 290(C).
    • Handle: RePEc:eee:energy:v:290:y:2024:i:c:s0360544223035764
    DOI: 10.1016/j.energy.2023.130182
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