Institutional difference and outward FDI: Evidence from China

Chengchun Li, Yun Luo, Glauco De Vita

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    23 Citations (Scopus)
    97 Downloads (Pure)

    Abstract

    This paper investigates the impact of institutional difference on China’s outward foreign direct investment (OFDI) through a gravity model. Our estimations are based on a large panel of 150 countries over the period 2003-2015. The results show that the institutional differences of government effectiveness and control of corruption between China and a host country have a statistically significant negative effect on China’s OFDI. In addition, our empirical evidence suggests that the ‘One Belt One Road’ policy does not have the expected positive effect on China’s OFDI. Consistent results are obtained from a set of robustness tests. Our findings provide a reasonable guideline for countries aiming to attract Chinese OFDI or seeking factors to boost it.
    Original languageEnglish
    Pages (from-to)1837-1862
    Number of pages26
    JournalEmpirical Economics
    Volume58
    Issue number4
    Early online date5 Sep 2018
    DOIs
    Publication statusPublished - Apr 2020

    Bibliographical note

    The final publication is available at Springer via http://dx.doi.org/10.1007/s00181-018-1564-y

    Copyright © and Moral Rights are retained by the author(s) and/ or other copyright
    owners. A copy can be downloaded for personal non-commercial research or study,
    without prior permission or charge. This item cannot be reproduced or quoted extensively from without first obtaining permission in writing from the copyright holder(s). The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the copyright holders.

    Keywords

    • China
    • Gravity model
    • Institutional difference
    • Outward foreign direct investment

    ASJC Scopus subject areas

    • Statistics and Probability
    • Mathematics (miscellaneous)
    • Social Sciences (miscellaneous)
    • Economics and Econometrics

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