Exploring the impact of FDI on environmental innovation in China: An empirical investigation

• Published in: Heliyon 2024-11, Vol.10 (21), p.e39001, Article e39001
• Main Author: Jiang, Yan
• Format: Article
• Language: English
• Subjects: China; Environmental innovation; Financial development; Foreign direct investment; Natural resources
• ISSN: 2405-8440; 2405-8440
• DOI: 10.1016/j.heliyon.2024.e39001

Today, firms face several environmental concerns, including but not limited to: decreasing natural resources, pollution management, and climate change. Little is known about the factors that motivate the many forms of environmental innovation or the effects of these endeavors on the financial success of businesses, despite the growing demand for eco-friendly goods and services. For the first time, this study introduces the core environmental determinants for China's 30 provinces covering the period of 2005–2022. In these determinants, this study considers foreign direct investment (FDI), financial development (FDI), natural resources (NRs), human capital (HC), and green energy (GE). However, to investigate the study objectives, the present study utilizes an advanced series of estimators that can overcome all panel data problems. In these estimators, the Augmented Mean Group (AMG), the Common Correlated Effect Mean Group (CCE-MG), and the Panel Quantile Regression (P-QR) are being considered. However, the results of the long-term investigation obtained interesting outcomes for selected provinces. For example, financial proxies such as economic development and foreign direct investment significantly increase the environmental innovations across the selected regions. Conversely, natural resources negatively affect environmental innovations and become a leading hurdle in the clean & green innovation process. Finally, empirical analysis finds a positive response of ecological regulations and green energy to an explained variable. This article outlined policy proposals for a low-carbon economy that would guarantee environmental innovation in certain provinces by reducing emissions; these proposals included increasing the use of renewable energy sources, sustainable technology, and environmentally friendly technology.