VAR analysis of foreign direct investment and environmental regulation: China's Case

This paper employs impulse response function of VAR model and the estimation variance decomposition method to investigate the two-way dynamic relationship between environmental regulation and FDI during 1985 to 2009. The result of generalized impulse response shows the impact effects of environmental regulation exerting to FDI become less and less in long-term, which verifies “hypothesis of pollution haven”. The inverse U-shape curve of “environmental regulation - FDI” depends on the choice of regulation indicators. Furthermore, the positive impulse response shows the inflows of FDI would cause the deterioration of ecology and the intervene of governments, which gives pressure to the transformation of environmental regulation standard.


Issue Date:
2011-01
Publication Type:
Journal Article
Record Identifier:
http://ageconsearch.umn.edu/record/204191
PURL Identifier:
http://purl.umn.edu/204191
Published in:
Business and Economic Horizons (BEH), Volume 05, Issue 2
Business and Economic Horizons (BEH)
Page range:
13-22
Total Pages:
10
JEL Codes:
Q5
Series Statement:
5
2




 Record created 2017-04-01, last modified 2018-01-23

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