Confucius institute effects on China's trade and FDI: Isn't it delightful when folks afar study Hanyu?

Lien, Donald; Oh, Chang Hoon; Selmier, W. Travis

doi:10.1016/j.iref.2011.05.010

Cited by 79 publications

(66 citation statements)

References 28 publications

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“…Much of the research carried out in Switzerland (e.g., Steyaert et al 2011, Berthoud et al 2013 and Finland (e.g., Vaara et al 2005; Barner-Rasmussen and Aarnio 2011) explicitly engages with language dynamics in countries with more than one official language. Inter-country research examines the linguistic distance between national languages or between English as a global language and specific countries' official languages to determine the language costs of economic transactions and their effect on bilateral trade (Hutchinson 2005) or the choice of target countries for foreign direct investment (Lien et al 2012). A recent paper develops a measure to capture the aggregate impact of common native language, common spoken language, common official language, and linguistic proximity on bilateral trade, disentangles ease of communication from other trade enabling factors and additionally considers translators and interpreters' roles (Melitz and Toubal 2014).…”

Section: Country Level Perspectivesmentioning

confidence: 99%

Language in International Business: A Review and Agenda for Future Research

2017

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A fast growing number of studies demonstrates that language diversity influences almost all management decisions in modern multinational corporations. Whereas no doubt remains about the practical importance of language, the empirical investigation and theoretical conceptualization of its complex and multifaceted effects still presents a substantial challenge. To summarize and evaluate the current state of the literature in a coherent picture informing future research, we systematically review 264 articles on language in international business. We scrutinize the geographic distributions of data, evaluate the field's achievements to date in terms of theories and methodologies, and summarize core findings by individual, group, firm, and country levels of analysis. For each of these dimensions, we then put forward a future research agenda. We encourage scholars to transcend disciplinary boundaries and to draw on, integrate, and test a variety of theories from disciplines such as psychology, linguistics, and neuroscience to gain a more profound understanding of language in international business. We advocate more multi-level studies and cross-national research collaborations and suggest greater attention to potential new data sources and means of analysis.

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Section: Country Level Perspectivesmentioning

confidence: 99%

Language in International Business: A Review and Agenda for Future Research

2017

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“…Their gravity model results imply that up to 60 percent of the trade between countries with ethnic Chinese population shares at the levels prevailing in South‐East Asia can be attributable to ethnic Chinese networks. Using the number of Confucius Institutes to be a measure of (reduction in) cultural distance, Lien et al () find that the establishment of a Confucius Institutes increases China's exports between 4 and 27 percent. A recent paper by Tadesse et al () estimates whether cross‐societal cultural differences influence China's external trade flows by using a measure of cultural distance constructed from World Value Surveys interviews conducted between the years 1995 and 2006.…”

Section: Cultural Distance and Cross‐border Flowsmentioning

confidence: 99%

“…Ethnic networks in the form of migrant populations have been found to raise FDI flows from the country of origin (see Javorcik et al, ). For China, Lien et al () find that the presence of Confucius Institutes increases bilateral outward FDI flows by 46 to 130 percent.…”

Section: Cultural Distance and Cross‐border Flowsmentioning

confidence: 99%

“…Based on the national culture data of Hofstede (), the national cultural distance index is

italicnat {cult dist}_{ij} = \frac{1}{4} \sum_{d = 1}^{4} \frac{{((), s_{di} - s_{dj})}^{2}}{v_{italicdi}},

where s di is country i 's score of cultural dimension d , s dj is China's score of dimension d and v di is the variance of this dimension across the whole sample. For China, these cultural distance measures have been found to significantly impact: inbound tourist flows (see Yang and Wong, ; Lien et al, ); firm‐level FDI decisions (see Quer et al, and Amighini et al, ); and outbound export and FDI flows (Lien et al, )…”

Section: The Gravity Modelmentioning

confidence: 99%

“…Previous work by Lien et al (, 2014) examines the impact of Confucius Institutes on Chinese exports and outward FDI and tourist flows into China. This paper advances this work in three important ways.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Does the Confucius Institute Network Impact Cultural Distance? A Panel Data Analysis of Cross‐Border Flows in and out of China

Ghosh

Lien

Yamarik

2017

Asian Economic Journal

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This paper examines the impact of cultural distance in general and the Confucius Institute Network in particular on cross‐border flows of tourists, goods and investment in and out of China. We estimate a panel gravity model of inbound and outbound flows between 2004 and 2012. We find that the presence of Confucius Institute(s) in the source country increases inbound tourism and equity flows and outbound export and FDI flows for China, while other measures of cultural distance have less of an impact.

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Estimation of linear dynamic panel data models with time‐invariant regressors

Kripfganz

Schwarz

2019

J of Applied Econometrics

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We present a sequential approach to estimating a dynamic Hausman-Taylor model. We first estimate the coefficients of the time-varying regressors and subsequently regress the first-stage residuals on the time-invariant regressors. In comparison to estimating all coefficients simultaneously, this two-stage procedure is more robust against model misspecification, allows for a flexible choice of the first-stage estimator, and enables simple testing of the overidentifying restrictions. For correct inference, we derive analytical standard error adjustments. We evaluate the finite-sample properties with Monte Carlo simulations and apply the approach to a dynamic gravity equation for US outward foreign direct investment. 1 Schooling itself is a time-invariant regressor in his data set. Yet it is hard to argue that its coefficient is identified because Andini uses only the first differences of time-varying regressors as instruments. These instruments are generally assumed to be uncorrelated with any time-invariant variable. 526 2 Plümper and Troeger (2007) proposed a three-stage approach for the static model that they label "fixed effects vector decomposition." In a symposium on this method, Breusch, Ward, Nguyen, and Kompas (2011) and Greene (2011) show that the first two stages can be characterized by an instrumental variables estimation with a particular choice of instruments, and that the third stage is essentially meaningless. 3 Hoeffler (2002) argues similarly. 4 As Binder, Hsiao, and Pesaran (2005) and Bun and Windmeijer (2010) emphasize, GMM estimators might suffer from a weak instruments problem when the autoregressive parameter approaches unity or when the variance of the unobserved unit-specific effects is large. Moreover, the number of instruments can rapidly become large relative to the sample size. The consequences of instrument proliferation, summarized by Roodman (2009), range from biased coefficient and standard error estimates to weakened specification tests. 5 Our two-stage procedure fits into the framework of sequential estimators discussed by Newey (1984). While our paper is only concerned with linear panel data models, Honoré and Kesina (2017) recently suggested related two-stage approaches for some nonlinear models. They use a bootstrap procedure to obtain valid standard errors in contrast to our analytical standard error correction.

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Confucius institute effects on China's trade and FDI: Isn't it delightful when folks afar study Hanyu?

Cited by 79 publications

References 28 publications

Language in International Business: A Review and Agenda for Future Research

Language in International Business: A Review and Agenda for Future Research

Does the Confucius Institute Network Impact Cultural Distance? A Panel Data Analysis of Cross‐Border Flows in and out of China

Estimation of linear dynamic panel data models with time‐invariant regressors

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