Abstract:

Cross-border capital flows have been a major force driving economic globalization. Foreign direct investment (FDI) plays a decisive role in seeking out market technology brands and enhancing the global competitiveness among international inflows. With the requirement of economic development, this paper focused on a performance evaluation of FDI in China. However, because of the planned transformation to a market economy in China, FDI has been promoted with a regional cascade structure. Similar to the development track of the Chinese economy, it is necessary to evaluate FDI quality more than purely quantity from a provincial point of view. Therefore, this paper evaluated the Chinese provincial FDI total factor productivity using the dynamic Malmquist model. In contrast to traditional evaluations, this paper focused on inter-temporal influence in FDI performance evaluation. To understand the inter-temporal effects, physical capital stock was defined as a dynamic variable in FDI sustainability performance. Additionally, with the pressure to reduce emissions, energy consumption was also considered during the evaluation. The empirical results revealed that the dynamic variable is the bottleneck in FDI performance for most Chinese provinces. It is only efficient in a few municipalities and provinces, such as Shanghai and Guangdong. Additionally, energy conservation was more efficient in the performance evaluation of eastern regions in China.

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