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Do Pollutions Deter Foreign Direct Investment in China?

Carlos Pestana Barros, Shunsuke Managi


The scale of environmental problems in China is clearly evident. This paper analyses foreign direct investment (FDI) in China with a finite mixture model, also known as latent class model to understand the relationship between FDI and several pollutions. This is used to regresses FDI as function covariates including pollutants. The results reveal that FDI is affected by pollutants. There are cases reducing pollution deters foreign investment in China.


China, FDI, pollutants, finite mixture model.

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