Journal
FINANCE RESEARCH LETTERS
Volume 39, Issue -, Pages -Publisher
ACADEMIC PRESS INC ELSEVIER SCIENCE
DOI: 10.1016/j.frl.2020.101611
Keywords
Foreign direct investment; Environmental regulation br; Difference-in-differences estimation br
Categories
Funding
- Fundamental Research Fund for Central Universities [JBK170506]
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The study found that countries with relaxed environmental regulations are more likely to attract foreign direct investment from polluting industries. However, the preference of China's multinational enterprises for destinations with lax regulations has shifted since the promotion of the Belt and Road Initiative.
This paper investigates whether environmental regulation affects patterns of foreign direct investment (FDI) and how such patterns change across time, industries, and destination countries. We examine the pattern of Chinese FDI outflow over 2008-2018 and apply difference -indifferences estimation to circumvent other potential confounders. As a result, we find evidence that host countries with more relaxed environmental regulations attract foreign direct investment from polluting industries. However, the preference for destinations with lax regulations has been weakened among China's multinational enterprises since the promotion of the Belt and Road Initiative began in 2013.
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