Abstract：This paper empirically analyses the impact mechanism of FDI on environmental pollution in host countries by using the spatial panel data at the urban level in China, and innovatively divides the innovation spillover effect of FDI into two aspects: productive innovation spillover effect and ecological innovation spillover effect. The results show that in the early stage of economic development, the innovation effect of foreign direct investment is mainly productive innovation, and the natural environment of the host country will aggravate pollution directly and indirectly through productive innovation effect, which is in line with the “pollution paradise” hypothesis. In the period of economic development transition, the innovation effect of foreign direct investment will gradually be dominated by ecological innovation spillover effect. The natural environment of the host country will directly and indirectly reduce industrial environmental pollution through the spillover of ecological technology innovation, which makes the environmental effects of FDI meet the “pollution halo” hypothesis. Under the concept of green development, China should actively guide the transformation of innovation spillover from production oriented to ecological oriented while further opening up.
Key words：FDI; Ecological Innovation Spillover; Pollution Paradise; Pollution Halo
The Chinese Version Appeared in Finance & Economics(04, 2019).