Energy intensity and foreign direct investment: A Chinese city-level study

Research output: Contribution to journalArticlepeer-review

Authors

Colleges, School and Institutes

External organisations

  • National University of Singapore
  • Nankai University

Abstract

In this paper we investigate the relationship between the energy intensity of Chinese cities and the location of foreign firms employing a unique dataset of 206 of the largest prefecture-level cities between 2005 and 2008. Our results reveal a non linear inverted-U shaped relationship between energy intensity and city-level per capita income with the majority of cities on the downward slope of the curve. We also find evidence of a significant and negative relationship between the foreign direct investment (FDI) flows into a city and energy intensity. However, this effect varies by geographic location reflecting differences in the ability of regions to absorb and benefit from environmental spillovers. The relatively small economic effect of FDI can in part explained by the propensity for foreign firms to invest in energy intensive sectors coupled with the trend for China to invest heavily in capital intensive industries.

Details

Original languageEnglish
Pages (from-to)484-494
Number of pages11
JournalEnergy Economics
Volume40
Publication statusPublished - 1 Nov 2013

Keywords

  • Economic growth, Energy efficiency, Foreign direct investment

ASJC Scopus subject areas