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Has the development of FDI and foreign trade contributed to China’s CO 2 emissions? An empirical study with provincial panel data

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  • Yu Hao
  • Yi-Ming Liu

Abstract

Since the reform and opening up in 1978, China’s foreign direct investment (FDI) and foreign trade have grown rapidly. At the same time, China’s carbon dioxide (CO 2 ) emissions surged and China has become the world’s biggest CO 2 emitter. The purpose of this paper is to investigate the relationship between FDI, foreign trade and carbon dioxide emissions in China. Using a two-equation model adapted from Halkos and Paizanos (Ecol Econ 91:48–56, 2013 ), the total impacts of FDI and foreign trade on emission are divided into the direct and indirect impacts and estimated accordingly. The estimation results suggest that the total impact FDI on per capita CO 2 emissions is negative. Concretely, the negative direct effect of FDI on carbon emissions dominates the positive indirect effect through FDI’s influence on per capita GDP. However, for foreign trade, both direct and indirect impacts on CO 2 emissions are insignificant after taking consideration of potential endogeneity and introducing dynamics. Copyright Springer Science+Business Media Dordrecht 2015

Suggested Citation

  • Yu Hao & Yi-Ming Liu, 2015. "Has the development of FDI and foreign trade contributed to China’s CO 2 emissions? An empirical study with provincial panel data," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 76(2), pages 1079-1091, March.
    • Handle: RePEc:spr:nathaz:v:76:y:2015:i:2:p:1079-1091
    DOI: 10.1007/s11069-014-1534-4
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    More about this item

    Keywords

    Foreign direct investment; Foreign trade; Panel data; CO 2 emissions; Direct and indirect impacts;
    All these keywords.

    JEL classification:

    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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