Foreign direct investment, environmental regulation, and environmental pollution: an empirical study based on threshold effects for different Chinese regions

On the basis of previous studies on the relations among foreign direct investment (FDI), environmental regulation, and environmental pollution, this work uses provincial panel data from 2000 to 2014 to study the effects of FDI and environmental regulation on environmental pollution by applying the panel-corrected standard error (PCSE) method. This paper then utilizes environmental regulation as the threshold variable to estimate the threshold effects of environmental regulation on FDI's influence on environmental pollution in a threshold regression model for the eastern, central, and western regions of China. The results show that stricter environmental regulation can substantially reduce the pollution in each region. FDI can decrease environmental pollution in the eastern and central regions, but it can increase pollution in the western region. There are double-threshold effects of environmental regulation on the effects of FDI on environmental pollution in each region. When the environmental regulation level is between the first threshold and the second threshold, FDI can decrease environmental pollution much more in the eastern and central regions and increase environmental pollution much less in the western region.