Does FDI have energy-saving spillover effect in China? A perspective of energy-biased technical change.

Existing studies pay little attention to when or under which conditions foreign direct investment (FDI) can spill energy-saving technologies. From a perspective of energy-biased technical change and using a two-layer nested constant elasticity of substitution (CES) production function, this paper investigates the energy-saving spillover effect of FDI on technical change (i.e., energy-saving spillovers) in China between 2002 and 2015. In particular, we consider the conditions of marketization, industry, technology, and labor mobility to examine whether and when FDI has energy-saving spillovers. The results indicate no income inequality effect, i.e., there is no evidence supporting that FDI flowing into low- and middle-income regions increases energy consumption, while FDI flowing into high-income regions conserves energy. However, there is a condition effect: FDI can improve (support the halo effect) or deteriorate (contradict the halo effect) the environmental performance under different conditions. Moreover, there is a threshold effect: the direction of FDI spillovers varies with the different levels of the threshold variables. An increasing marketization motivates enterprises to select energy-biased technologies. It is more likely to generate energy-saving spillovers in the regions with a lower specialized agglomeration level. FDI will have energy-biased spillovers when domestic technological level is relatively high with an evident energy-biased technology. In addition, a moderate labor mobility is beneficial to the energy-saving spillovers of FDI. [ABSTRACT FROM AUTHOR]