The impact of FDI on regional economic growth in China: an empirical analysis based on the policy of the “two controlled zones”

XUE Jian1 JI Xiaoqin1 ZHU Qingye1

(1.School of Economics and Management, Shaanxi University of Science & Technology, Xi’an, Shaanxi 710021)

【Abstract】In recent years, the balance between environmental protection and economic growth has become an urgent problem to be solved. Based on the “two control zones” policy and taking 287 cities above the prefecture level in China from1995 to 2010 as the research sample, this paper uses the difference-in-differences approach to analyze the impact of environmental regulation on the regional economy. In this model, foreign direct investment (FDI) related indicators are added to analyze the impact of environmental regulation and FDI on China’s regional economic growth. The results show that the “two controlled zones” policy has a significant role in promoting China’s regional economic growth. This effect is mainly reflected in the fact that the effect of the “two controlled zones” policy on China’s regional economy is gradually weakened from the Eastern region to the Central region, and has an inhibiting effect on the Western region. FDI also has a significant impact on China’s regional economic growth. The positive effect has gradually weakened from the east to the west. This shows that under the “two controlled zones” policy, strengthening environmental regulation and FDI is conducive to promoting regional economic development, so as to achieve a win-win situation of environmental regulation, FDI and economic growth.

【Keywords】 environmental regulation; foreign direct investment (FDI) ; “two control zones” policy; regional economic growth;

【Funds】 Project of the National Social Science Fund of China (16BGL146) Basic Research Program of Natural Science Foundation of Shaanxi Province (2018JM7005)

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(Translated by CHEN Wen)


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This Article


CN: 53-1193/F

Vol 35, No. 03, Pages 140-145

March 2019


Article Outline


  • 1 Introduction
  • 2 Policy background of the “two control zones” and literature review
  • 3 Theoretical analysis of the impact of environmental regulation and FDI on regional economic growth
  • 4 Empirical model
  • 5 Empirical results
  • 6 Conclusions and policy implications
  • References