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Environmental Regulation Effect on Green Total Factor Productivity: Mediating Role of Foreign Direct Investment Quantity and Quality

Author

Listed:
  • Yusen Luo

    (School of Management, Jiangsu University, Zhenjiang 212013, China)

  • Zhengnan Lu

    (School of Management, Jiangsu University, Zhenjiang 212013, China)

  • Chao Wu

    (School of Finance and Economics, Jiangsu University, Zhenjiang 212013, China)

  • Claudia Nyarko Mensah

    (Department of Management Studies Education, Akenten Appiah-Menka University of Skills Training and Entrepreneurial Development, Kumasi 00233, Ghana)

Abstract

Green total factor productivity (GTFP) is an excellent index for green development. The objective of this study was to check whether environmental regulation (ER) can affect GTFP through the mediating role of foreign direct investment (FDI) quantity and quality. Using the super-efficiency Epsilon-based measure (EBM) model and a Malmquist–Luenberger (ML) index, China’s GTFP growth was measured during 1998–2018. On this basis, we adopted a Systematic Generalized Method of Moments (SYS-GMM) to analyze the effect of ER on GTFP. The findings show that China’s GTFP declined first and rose again during the sample period. GTFP in the coastland was greater than that in the inland region. ER positively affected China’s GTFP growth. FDI quantity and quality mediated the nexus between ER and GTFP growth in the whole nation. Specifically, this mediation role of FDI quantity and quality was only significant in coastal China. Additionally, financial development can also boost GTFP growth in China. Given the importance of developing a green economy, the government should improve the FDI quality and attract green FDI.

Suggested Citation

  • Yusen Luo & Zhengnan Lu & Chao Wu & Claudia Nyarko Mensah, 2023. "Environmental Regulation Effect on Green Total Factor Productivity: Mediating Role of Foreign Direct Investment Quantity and Quality," IJERPH, MDPI, vol. 20(4), pages 1-18, February.
    • Handle: RePEc:gam:jijerp:v:20:y:2023:i:4:p:3150-:d:1064725
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