Search

Abstract This paper examines the how new manufacturing firms choose locations in response to the environmental regulations in Jiangsu, China. In particular, we utilize three representative measures of the environmental regulations to test the consistence of the Pollution Haven Hypothesis (PHH). The dramatic results indicate that different measures of environmental regulation lead to different conclusions of the PHH. However, firms' relocation patterns are common and consistent, i.e., new polluting firms are more likely to be driven by the government environmental mandates to northern Jiangsu, where the pollution abatement cost is high. This pattern is consistent with the industrial planning of the province, suggesting that local government may use environmental regulations to achieve economic objectives. More comprehensive and equitable policy design is thus recommended to address the problems of environmental equity in China. Highlights • We examined firms' location choice in response to the environmental regulations. • We utilized three representative measures of the environmental regulations. • We find different measures of environmental regulation lead to different conclusions. [ABSTRACT FROM AUTHOR]

As the pressure of environmental deterioration mounted in recent years, Chinese government has formulated a series of environmental policies and regulations with the intention of improving environmental quality. However, the effectiveness of these environmental regulations have not been carefully examined yet. This study for the first time investigates the effects of environmental regulations on the environmental performance. Using the city-level panel data of 283 Chinese cities for the period 2003–2010 and four indicators for environmental quality (the industrial waste water discharged, industrial SO2 emissions and industrial Soot emissions), this study employs the first-difference GMM method that could deal with potential endogeneity and allow dynamics to conduct the empirical estimations. Overall, the estimation results indicate that current environmental control measures and regulations have not achieved the desired goal of controlling and reducing pollution. Moreover, the direct impact of FDI on China's environment is negative, suggesting that there is evidence for the “Pollution Heaven” hypothesis. The coefficients of the interactive term of environmental regulation and foreign direct investment are estimated to be negative, which indicates that the environmental regulation is effective only when FDI is controlled for. The estimation results are basically consistent for different Chinese regions. [ABSTRACT FROM AUTHOR]

The rapid growth of foreign investment is a double-edged sword, which not only drives China's rapid economic development, but also aggravates China's energy shortage and environmental pollution. Chinese government has strengthened environmental regulations with the intention of restricting the entry of foreign investment, improving the quality of foreign direct investment (FDI). However, the effect of environmental regulation on the quality of FDI has not been carefully examined yet. This study constructs a panel model and uses the panel data of 30 provinces in China from 2009 to 2018 to scrutinize the effect of different types of environmental regulation policies on the quality of FDI. The results show that the strengthening of environmental regulation policies can improve the quality of FDI and avoid making China a "pollution paradise" for FDI. There are significant differences in the effects of different types of such policies on the quality of FDI; the type of administrative supervision and social participation policies play positive roles in improving the quality of FDI. There are also significant differences in the strategies for attracting foreign investment among different regions, as well as in the focuses of their environmental regulation objectives. Therefore, for environmental regulation policies to play a more positive role in promoting the quality of FDI and the high-quality development of the national economy, this study suggests that it is necessary to further implement the policy of opening up to the outside world, optimise foreign investment structures, deepen opening up to the outside world, optimise the structure of foreign investment, deepen the reform of the environmental supervision structure, tighten the law enforcement of environmental protection, seek accurate environmental regulation based on the realities of regional foreign investment development, take multiple measures to improve the business environment to promote the quality and efficiency of foreign investment, and so on. Image 1 • Strict environmental regulation policy can improve the unit scale and unit benefit of FDI. • Distinguish and test the potential effects of different types of environmental policy tools on the quality of FDI. • Administrative supervision policy and social participation policy can improve the quality of FDI more effectively. • Sustained improvement of FDI quality depends on coordinated advances in economic, political, and environmental reforms. [ABSTRACT FROM AUTHOR]