Does China's outward direct investment improve green total factor productivity in the "Belt and Road" countries? Evidence from dynamic threshold panel model analysis.

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Date: Dec. 1, 2020
Publisher: Elsevier B.V.
Document Type: Report
Length: 472 words

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Keywords Belt and road initiative; Outward direct investment; Institutional quality; Green total factor productivity; Dynamic threshold models Highlights * The green total factor productivity (GTFP) of the "Belt and Road (B&R)" countries is estimated. * The influence of China's outward direct investment on GTFP of B&R countries is investigated. * A dynamic threshold panel model that addresses potential endogeneity is employed. * China's outward direct investment does not have a pollution shelter effect. * The positive effect of investment on GTFP is further enhanced as the institutional quality improves. Abstract Following the "Belt and Road" (B&R) initiative, China has significantly increased its outward direct investment (ODI). Although these investments help to boost these countries' productivity, their impacts on the environment are still controversial and deserve careful investigation. This study for the first time examines whether China's ODI has improved the green total factor productivity (GTFP), a comprehensive index for environmental quality and productivity. Moreover, a new data set composed of ICRG, World Bank WDI, Heritage Foundation, and Wind databases is used to match the panel data of 46 B&R countries for the period of 2003--2016. A newly developed dynamic threshold panel model with GMM characteristics is utilized to explore the possible nonlinear relationship with full consideration of heterogeneity. The empirical results indicate that there is no pollution shelter effect on China's ODI. With the increase in China's ODI, the GTFP of the B&R countries has been significantly improved. Additionally, China's ODI has a greater role in promoting GTFP in B&R countries with higher institutional quality. The positive effects of China's ODI on the GTFP of B&R countries depend on the institutional qualities of the countries, and the enhancement effect becomes greater when the countries have better institutions. There is also evidence that China's ODI significantly promoted the GTFP of countries in the East Asia and Pacific region, South Asia, Central Asia and Europe, while China's ODI did not significantly promote the GTFP of countries in the Middle East and North Africa. Author Affiliation: (a) Center for Energy and Environmental Policy Research, Beijing Institute of Technology, Beijing, 100081, China (b) School of Management and Economics, Beijing Institute of Technology, Beijing, 100081, China (c) Beijing Key Lab of Energy Economics and Environmental Management, Beijing, 100081, China (d) Sustainable Development Research Institute for Economy and Society of Beijing, Beijing, 100081, China (e) Collaborative Innovation Center of Electric Vehicles in Beijing, Beijing, 100081, China (f) School of Economics, Nankai University, Tianjin, 300071, China * Corresponding author. School of Management and Economics, Beijing Institute of Technology, 5 Zhongguancun South Street, Haidian District, Beijing, 100081, China. Article History: Received 24 January 2020; Revised 15 August 2020; Accepted 20 August 2020 (footnote)1 These authors contributed equally and should be considered co-first authors. Byline: Haitao Wu [haitao.kungfuer@gmail.com] (a,b), Siyu Ren [rensiyuking@126.com] (f,1), Guoyao Yan [523250029@qq.com] (a,1), Yu Hao [https://ideas.repec.org/d/cebitcn.html] (a,b,c,d,e,*)

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Gale Document Number: GALE|A640072432