<p>This study investigates the impact of foreign direct investment (FDI) entry on the low-carbon transition of the global supply chain (GSC) in China. We proxy for the global carbon footprint by estimating the carbon emission intensity embedded in firms’ GSCs. Using a difference in differences approach that exploits adjustments to the FDI Catalogue as a quasi-natural experiment, we find that FDI entry reduces the global carbon footprint of domestic firms. We also observe that foreign firms exhibit lower trade-induced carbon emission intensity than domestic firms do, which supports the pollution halo hypothesis. This study contributes to FDI spillovers by exploring the supply chain sharing mechanism linked to​ the variety, quality, and origin of intermediate imports and the technology spillover channel associated with green innovation and green product development. FDI spillovers also occur through vertical connections between industries. Moreover, although the exit of foreign-owned enterprises weakens the spillover effects of FDI entry, their conversion to domestic ownership strengthens these effects.</p>

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FDI entry and the carbon footprint in the global supply chain: evidence from China

  • Yang Hu,
  • Kui Wang,
  • Jing Zhou,
  • Feng Hu

摘要

This study investigates the impact of foreign direct investment (FDI) entry on the low-carbon transition of the global supply chain (GSC) in China. We proxy for the global carbon footprint by estimating the carbon emission intensity embedded in firms’ GSCs. Using a difference in differences approach that exploits adjustments to the FDI Catalogue as a quasi-natural experiment, we find that FDI entry reduces the global carbon footprint of domestic firms. We also observe that foreign firms exhibit lower trade-induced carbon emission intensity than domestic firms do, which supports the pollution halo hypothesis. This study contributes to FDI spillovers by exploring the supply chain sharing mechanism linked to​ the variety, quality, and origin of intermediate imports and the technology spillover channel associated with green innovation and green product development. FDI spillovers also occur through vertical connections between industries. Moreover, although the exit of foreign-owned enterprises weakens the spillover effects of FDI entry, their conversion to domestic ownership strengthens these effects.