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How Does Outward Foreign Direct Investment Affect Green Total Factor Productivity? Evidence from Increment and Quality Improvement

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  • Geng Tian

    (Economics and Management School, Wuhan University, Wuhan 430072, China)

Abstract

Based on the provincial data of China from 2011 to 2020, this paper analyzes the effect and influence mechanism of Outward Foreign Direct Investment (OFDI) on Green Total Factor Productivity (GTFP) theoretically and empirically. The results show that OFDI can significantly improve GTFP, and this conclusion is still valid after measurement replacement, instrumental variable method and systematic GMM treatment. The mechanism analysis demonstrates that digital inclusive finance can strengthen the promoting effect of OFDI on GTFP, and OFDI can promote invention innovation and utility model innovation, thus enhancing GTFP. The heterogeneity analysis shows that OFDI can play a stronger role in promoting GTFP in the eastern region, western region, and the regions with a low marketization level. Therefore, actively promoting OFDI, optimizing the accuracy of OFDI, speeding up the development of digital inclusive finance, and formulating policies according to local conditions, play a vital role in promoting GTFP and the transformation of economic structure.

Suggested Citation

  • Geng Tian, 2022. "How Does Outward Foreign Direct Investment Affect Green Total Factor Productivity? Evidence from Increment and Quality Improvement," Sustainability, MDPI, vol. 14(19), pages 1-12, September.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:19:p:11833-:d:919924
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    References listed on IDEAS

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    3. Branstetter, Lee, 2006. "Is foreign direct investment a channel of knowledge spillovers? Evidence from Japan's FDI in the United States," Journal of International Economics, Elsevier, vol. 68(2), pages 325-344, March.
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    Cited by:

    1. Guang Chen & Akira Hibiki, 2022. "Can the Carbon Emission Trading Scheme Influence Industrial Green Production in China?," Sustainability, MDPI, vol. 14(23), pages 1-22, November.
    2. Yan Li & Xiaohan Zhang & Chenxin Jin & Qingbo Huang, 2022. "The Influence of Reverse Technology Spillover of Outward Foreign Direct Investment on Green Total Factor Productivity in China’s Manufacturing Industry," Sustainability, MDPI, vol. 14(24), pages 1-17, December.

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