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Nonlinear Effects of Urbanization and Outward Foreign Direct Investment on Carbon Emissions in China

Author

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  • Ming Yi

    (Research Center of Resource and Environmental Economics, China University of Geosciences, Wuhan 430074, China)

  • Mengqi Gong

    (School of Economics, Huazhong University of Science & Technology, Wuhan 430074, China)

  • Ting Wu

    (Research Center of Resource and Environmental Economics, China University of Geosciences, Wuhan 430074, China)

  • Yue Wang

    (Department of Urban Planning and Design, The University of Hong Kong, Hong Kong SAR 999077, China)

Abstract

It is essential to explore the relationship between China’s urbanization, outward foreign direct investment, and carbon emissions, in order to better understand China’s carbon emissions reduction target. To this end, the nonlinear Granger causality test and Markov-switching model are applied to analyze the structural effects of urbanization and outward foreign direct investment on domestic emissions, on the basis of time series data from 1984–2016. The results show that the promotion effect of outward foreign direct investment on carbon emissions is increased from low-carbon regime to high-emission regime. Specifically, 1% increase in OFDI leads to a rise in carbon emissions by 0.064% and 0.112% under the former and latter regime respectively. Unlike the effect trend of outward foreign direct investment, the effect of urbanization on carbon emissions is decreased from a high-emission regime (5.221% rise in carbon emissions with 1% increase in the level of urbanization) to a low-carbon regime (3.133% rise in carbon emissions with 1% increase in the level of urbanization).

Suggested Citation

  • Ming Yi & Mengqi Gong & Ting Wu & Yue Wang, 2018. "Nonlinear Effects of Urbanization and Outward Foreign Direct Investment on Carbon Emissions in China," Sustainability, MDPI, vol. 10(12), pages 1-11, November.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:12:p:4411-:d:185514
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    1. Pengfei Cheng & Xingang Huan & Baekryul Choi, 2022. "The Comprehensive Impact of Outward Foreign Direct Investment on China’s Carbon Emissions," Sustainability, MDPI, vol. 14(23), pages 1-16, December.
    2. Qianxiao Zhang & Syed Asif Ali Naqvi & Syed Ale Raza Shah, 2021. "The Contribution of Outward Foreign Direct Investment, Human Well-Being, and Technology toward a Sustainable Environment," Sustainability, MDPI, vol. 13(20), pages 1-29, October.
    3. Ang Li & Xiaofan Li & Yi Li & Hui Wang & Hong Zhang, 2022. "The Impact of Urbanization on Carbon Emissions and Spatial–Temporal Differentiation Based on Meta-Analysis in China," Sustainability, MDPI, vol. 14(22), pages 1-16, November.

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