Institutional difference and outward FDI: Evidence from China

Chengchun Li, Yun Luo, Glauco De Vita

Research output: Contribution to journalArticle

8 Citations (Scopus)
42 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

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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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