Green Technology of Foreign Direct Investment on Public Health: Evidence from China

Abstract

Nowadays, public health issues are increasingly in the spotlight, and the role played by foreign direct investment (FDI) cannot be ignored, especially in developing countries. Scholars have discussed the influencing mechanism of FDI on public health from both positive and negative aspects, but there is little literature focused on the impact of FDI’s green technology spillovers. This paper explores the impact of spontaneous green technology progress induced by FDI, i.e., FDI’s green technology spillover effect, on the public health status of China. It constructs a theoretical model based on the cost discovery theory and uses the Global Malmquist–Luenberger Method to calculate the green technology spillover index; then, it empirically researches the impact of this spillover effect on public health based on the Grossman health product function, using Chinese provincial data from 2007 to 2019. After a series of robustness tests, this paper also discusses the regional heterogeneity and the influencing mechanism. The main conclusions are as follows: Firstly, there is a significant negative correlation between FDI’s green technology spillover and infant mortality, indicating that the spillover effect significantly promotes China’s public health. Secondly, the results of regional heterogeneity show that the spillover effect of green technology presents a decreasing trend from east to west regions. The threshold effect test results also show that, when the level of economic development is extremely low or exceeds a specific threshold, FDI’s green technology spillover will have a positive impact on public health. Finally, FDI’s green technology spillover improves public health by controlling environmental pollution and optimizing industrial activities, but it does not worsen public health by increasing income inequality. The conclusions of this paper provide empirical support and policy suggestions for rationally and effectively utilizing FDI to promote China’s public health in the future.