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Generalized spatial two stage least squares analysis of foreign direct investment air pollution and green technology innovation in Chinese cities
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  • Published: 27 January 2026

Generalized spatial two stage least squares analysis of foreign direct investment air pollution and green technology innovation in Chinese cities

  • Yinhui Wang1,2,
  • Xiaodan Gao3 &
  • Hu Li3,4 

Scientific Reports , Article number:  (2026) Cite this article

We are providing an unedited version of this manuscript to give early access to its findings. Before final publication, the manuscript will undergo further editing. Please note there may be errors present which affect the content, and all legal disclaimers apply.

Subjects

  • Energy and society
  • Environmental economics
  • Environmental social sciences

Abstract

This study investigates how foreign direct investment (FDI) affects urban air pollution and when green technology innovation (GTI) can buffer that effect. Using panel data for 236 Chinese cities from 2008 to 2020, we estimate a dynamic spatial specification with generalized spatial two-stage least squares (GS2SLS) to account for spatial spillovers and temporal persistence in PM2.5. The results indicate that FDI is associated with higher PM2.5 on average, but the adverse effect weakens where GTI is stronger. Threshold analysis further suggests a nonlinear pattern whereby sufficiently high GTI attenuates the pollution impact of FDI. The main findings are robust to alternative spatial weight matrices and commonly used measures of air pollution and GTI. Policy-wise, the evidence highlights two levers that work jointly: upgrading city-level green innovation capacity and screening FDI by environmental performance. Strengthening cross-city coordination also matters, given the spatial nature of pollution. Overall, the paper clarifies the conditions under which FDI’s environmental footprint can be reduced and provides an integrated view of FDI, innovation, and air quality within a spatial–dynamic framework.

Data availability

The datasets presented in this study are available on request from the corresponding authors.

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Acknowledgements

This work was supported by the Key Research Base of Social Sciences in Sichuan Universities — Research Center for Science and Technology Innovation and New Economy in the Chengdu–Chongqing Twin-City Economic Circle (No. CYCX2025ZC49), the Yibin Municipal Philosophy and Social Sciences Fund 2025 Planning Project (No. YB25Q03), Sichuan Key Provincial Research Base of Intelligent Tourism, Sichuan University of Science and Engineering (No. ZHYR24-05), the Key Research Base of Humanities and Social Sciences, Sichuan Provincial Department of Education — Research Center for Science-Technology Finance and Entrepreneurial Finance (No. KJJR202508), and the Chengdu Center for Philosophy and Social Sciences — Research Center for Refined Governance of Mega-cities (No. TD2025Z5).

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Authors and Affiliations

  1. School of Economics and Business Administration , Yibin University , Yibin, 644000, China

    Yinhui Wang

  2. Key Laboratory of Digital Analysis and Intelligent Decision-Making for Urban-Rural Industrial Integration Development, Sichuan Province for Philosophy and Social Sciences, Yibin, 644000, China

    Yinhui Wang

  3. School of Economics , Sichuan University of Science and Engineering , Yibin, 644000, China

    Xiaodan Gao & Hu Li

  4. Sichuan Key Provincial Research Base of Intelligent Tourism , Sichuan University of Science and Engineering , Yibin, 644000, China

    Hu Li

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  1. Yinhui Wang
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  2. Xiaodan Gao
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  3. Hu Li
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Yinhui Wang contributed to writing the original draft, data curation, investigation, and methodology, and analysis; Xiaodan Gao and Hu Li contributed to data curation, methodology, analysis, validation, reviewing and editing.

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Correspondence to Xiaodan Gao or Hu Li.

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Wang, Y., Gao, X. & Li, H. Generalized spatial two stage least squares analysis of foreign direct investment air pollution and green technology innovation in Chinese cities. Sci Rep (2026). https://doi.org/10.1038/s41598-026-37141-6

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  • Received: 19 May 2025

  • Accepted: 20 January 2026

  • Published: 27 January 2026

  • DOI: https://doi.org/10.1038/s41598-026-37141-6

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Keywords

  • Green technology innovation
  • Foreign direct investment
  • Air pollution
  • Chinese cities
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