How FDI and technology innovation mitigate CO2 emissions in high-tech industries: evidence from province-level data of China

The high technology (high-tech) industry of China has gained a key strategic position in the Chinese economic goals. In this positioning, foreign direct investment (FDI) and technological innovation have emerged as strong pillars of the high-tech industry. However, there are growing concerns of carbon emission from this industry which is still debatable. In this context, this study measures the effect of FDI and technology innovation on carbon emissions in the high-tech industry from 28 provinces of China. The study uses the provincial data for China over the period 2000-2018. In addition to examining unit root properties, structural breaks, and cointegration, this study uses quantile regression for estimating long-run relationships among study variables. The findings reveal the negative impact of FDI on carbon emissions. Technology innovation positively impacts in the initial three quantiles, whereas negatively impacts in the next six quantiles. These results indicate that FDI and technology innovation have shaped the energy intensity in the high-tech industry, which causes fluctuation in carbon emissions over time. After controlling the effects of urbanization, energy intensity, and economic growth, this study recommends that policymakers should emphasize on the heterogeneous effects of FDI and technology-lead emissions at different quantiles during the process of CO2 emission reduction.