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Outward foreign direct investment and urban green productivity: Promote or inhibit?

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  • Wang, Juntian
  • Chen, Jingwei
  • Li, Rongrong

Abstract

This paper constructs an empirical model that fits the Chinese context by incorporating human capital, foreign direct investment (FDI), and economic development level into an absorptive capacity category. Concurrently, the model incorporates absorptive capacity into the threshold model. The empirical analysis, using Chinese provincial-level data from 2004 to 2020, shows that outward foreign direct investment (OFDI) activities can promote green total factor productivity (GTFP) and that the green growth effect is more substantial for the stock size of OFDI. Further study finds that OFDI in both regions with lower levels of green growth and lower marketization enhances GTFP; the level of regional marketization also affects the green growth effect of OFDI, with the difference that OFDI negatively affects GTFP when the regional marketization level is higher. The three absorptive capacities of the central variables also affect the green growth effect of OFDI and have a threshold effect on GTFP. OFDI activities thus remain a vital strategy for China's high-quality economic development, and the supportive policies related to OFDI warrant urgent attention. This paper provides empirical evidence and policy implications for fully acknowledging the contribution of OFDI activities in optimizing the absorption capacity channel and improving regional GTFP.

Suggested Citation

  • Wang, Juntian & Chen, Jingwei & Li, Rongrong, 2023. "Outward foreign direct investment and urban green productivity: Promote or inhibit?," International Review of Economics & Finance, Elsevier, vol. 88(C), pages 516-530.
    • Handle: RePEc:eee:reveco:v:88:y:2023:i:c:p:516-530
    DOI: 10.1016/j.iref.2023.06.040
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    References listed on IDEAS

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    3. Manuel Agosin & Roberto Machado, 2005. "Foreign Investment in Developing Countries: Does it Crowd in Domestic Investment?," Oxford Development Studies, Taylor & Francis Journals, vol. 33(2), pages 149-162.
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    Cited by:

    1. Shao, Yanmin & Li, Junlong & Zhang, Xueli, 2024. "Outward foreign direct investment and green technology innovation: A company and host country perspective," Technological Forecasting and Social Change, Elsevier, vol. 203(C).
    2. Zhang, Qi & Wu, Peipei & Li, Rongrong & Chen, Afei, 2024. "Digital transformation and economic growth Efficiency improvement in the Digital media era: Digitalization of industry or Digital industrialization?," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 667-677.
    3. Khurram, Muhammad Usman & Abbassi, Wajih & Chen, Yifan & Chen, Lifeng, 2024. "Outward foreign investment performance, digital transformation, and ESG performance: Evidence from China," Global Finance Journal, Elsevier, vol. 60(C).

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