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Does green foreign investment contribute to air pollution abatement? Evidence from China

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  • Bo Yuan
  • Qiuyue Yin

Abstract

To better balance economic growth and environmental protection, China is encouraging green foreign direct investment (FDI), but the environmental impact remains unclear. Our study examines the environmental impact of green FDI at small spatial scales using a unique dataset. Results show that green FDI significantly alleviates local air pollution. This effect is more pronounced in the vicinity of green FDI enterprises' sites and decays as the distance increases. Also, it is more salient in areas where local governments highlight environmental protection. Heterogeneous analysis finds that the effect is more significant for enterprises that are small‐scale, sole‐venture or in manufacturing industries.

Suggested Citation

  • Bo Yuan & Qiuyue Yin, 2024. "Does green foreign investment contribute to air pollution abatement? Evidence from China," Journal of International Development, John Wiley & Sons, Ltd., vol. 36(2), pages 912-938, March.
    • Handle: RePEc:wly:jintdv:v:36:y:2024:i:2:p:912-938
    DOI: 10.1002/jid.3846
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