Green Total Factor Productivity and Its Nonlinear Relationship With Coordinated FDI Development: Evidence From Panel Models

Abstract

This study investigates the underexplored nonlinear impact of coordinated foreign direct investment on green total factor productivity in the context of China. While existing literature acknowledges the role of FDI in fostering economic growth and environmental development, it has yet to thoroughly address the synchronizing effects of inward and outward FDI on factor productivity, particularly in alignment with Sustainable Development Goals (SDGs) and ESG principles. Using provincial-level data from 1995 to 2022 and employing a panel model, we analyze the U-shaped relationship between FDI coordination on factor productively in the context of China. Our findings reveal that synchronized FDI significantly boosts GP in the economically advanced eastern provinces, whereas the effect is complex and region-dependent in central and western areas, where structural and economic disparities play a more pronounced role. These results contribute to existing knowledge by clarifying the pathway through which coordinated FDI can enhance sustainable development. Our study concludes with policy recommendations emphasizing region-specific strategies that balance economic growth and environmental goals, fostering a comprehensive approach to sustainable development.