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ID: 187919

Environmental regulation and outward foreign direct investment: evidence from China / Dong, Yan; Tian, Jinhuan; Wen, Qiang

Dong, Yan	Journal Article
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This paper explores the impact of environmental regulation (ER) on outward foreign direct investment (FDI) flows in China. During the period from 2013 to 2015, all Chinese cities were required to join a nationwide automatic air quality monitoring network in batches, and this policy exogenously raised local environmental regulation. This unique policy implemented full coverage through a staggered adoption, which motivates this paper to apply an event study approach to identify the treatment effect of stringent environmental regulation. Based on a city-year level capital outflows dataset constructed from the fDi Markets database, we obtain three main findings: (1) environmental regulation significantly stimulates outward FDI flows; (2) this promoting effect centers on polluting industries; and (3) these ER-induced FDI outflows are mainly directed toward countries with weaker environmental protection and with a closer geographic and cultural distance to the home country. These results together provide a snapshot confirming the classical “pollution haven hypothesis”.

Key Words

Environmental Regulation ; Event Study ; Cultural Proximity ; Capital Outflows ; Geographic Proximity

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ID: 143411

Market potential, firm exports and profit: which market do the Chinese firms profit from? / Ouyang, Puman; Zhang, Teng ; Dong, Yan

Ouyang, Puman	Article
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This paper examines the effects of market potential on Chinese firms' exports and profit by using data from the Chinese industrial enterprise database and The China City Statistical Yearbooks during 1998–2007. We find that international market potential has positive effects on firm exports, but negative effects on firm profit, while domestic market potential has opposite impacts. This finding suggests that Chinese firms' profit mainly stems from the domestic market. Moreover, the adverse impact of international market potential on firm profit diminishes with the increase of firm productivity, and some firms with higher productivity may benefit from the expansion of foreign markets.

Key Words

Firm Productivity ; International Market Potential ; Domestic Market Potential ; Profit Source

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