Does foreign aid reduce the country's risk of OFDI? The Chinese experience

Wang, Haijun; Hu, Yang; Li, Fengya; Zhang, Min

doi:10.1002/ise3.20

Cited by 2 publications

(1 citation statement)

References 40 publications

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“…стран, которым Китай помогал в период с 2000 по 2019 г. (Wang et al 2022), заслуживает особого внимания, поскольку содержит выводы, касающиеся как опыта КНР, так и рассматриваемой нами треугольной связки в целом.…”

Section: осмысление специфики опыта кнрunclassified

Foreign Aid’s Effect on Political Risks for Foreign Direct Investment: A Literature Review

Bartenev

2023

Vestnik MGIMO-universiteta

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The last decade has seen an increasing focus on the involvement of the private sector in international sustainable development, particularly in high-risk jurisdictions. This involvement encompasses a broad spectrum, incorporating innovative private sector instruments—now acknowledged as ODA-eligible by the OECD—as well as traditional tools of external official support to developing countries, which remain the primary contributors to ODA flows. This literature review aims to consolidate the academic exploration of the enduring classic foreign aid tools' impact on the political risks associated with foreign direct investment (FDI), and identifies prevalent limitations while suggesting approaches to overcome these challenges.The first section delineates the central theme and rationale behind the literature selection process, utilizing the Google Scholar database to contextualize the research within a comprehensive framework. The subsequent section categorizes and compares the most relevant studies based on formal criteria and methodological parameters. Sections three and four critically assess the scholarly contributions in conceptualizing the mitigating influence of foreign aid in general, focusing on its impact on specific political risks such as expropriation, terrorism, and corruption. The concluding section delves into studies that explore foreign aid and foreign direct investment flows from China, the largest non-Western donor.A bibliometric analysis reveals a noteworthy disparity between research attention and policymaking focus on the subject matter. Notably, the selected papers fail to comprehensively cover the full spectrum of primary extra-legal and legal-governmental political risks for transnational businesses. Scholars' assessments of foreign aid's mitigating effect often lack differentiation between grants and loans or between flows directed to different sectors, as well as the distinction between aid routed through public institutions and bypassing them. Notably absent is a comprehensive analysis encompassing the complete range of 'established' Western and emerging non-Western aid providers, or an exploration of aid flows from non-OECD countries other than China. Most research focuses on Africa and fails to differentiate between recipients based on fragility, income levels, or other relevant categorizations. Moreover, the researchers have yet to delve into data post the COVID-19 outbreak, a critical period that significantly altered perceptions of political risk, foreign aid, and FDI flows. The literature review illuminates a research gap awaiting substantial exploration.

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Section: осмысление специфики опыта кнрunclassified

Foreign Aid’s Effect on Political Risks for Foreign Direct Investment: A Literature Review

Bartenev

2023

Vestnik MGIMO-universiteta

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Re-Examining the Effects of Official Development Assistance on Foreign Direct Investment Applying the VAR Model

Ono

Sekiyama

2022

Economies

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This study re-examined the effect of official development assistance (ODA) of five major donor countries (France, Germany, Japan, the United Kingdom, and the United States) on foreign direct investment (FDI) using panel data from 2003 to 2020. In addition to the system Generalized Method of Moments (GMM) with the gravity model, the Granger causality test and impulse response analysis with the panel VAR model was conducted. It was concluded that ODA did not necessarily have an effect on FDI since the 2000s. It is also suggested that the vanguard effect of Japanese ODA, as indicated by some previous studies, appeared mainly in the 1990s and may not be sustainable. The novelty of this study is to verify the effects of the ODA of major donors on FDI using new data from the 2000s onward, especially to reveal that the vanguard effect of Japanese ODA has not been observed since the 2000s. A limitation of this study is to determine only the presence or absence of a general trend at a statistically significant level. Therefore, further research on individual cases is expected to find how ODA has affected the investment decisions of individual companies.

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Does foreign aid reduce the country's risk of OFDI? The Chinese experience

Cited by 2 publications

References 40 publications

Foreign Aid’s Effect on Political Risks for Foreign Direct Investment: A Literature Review

Foreign Aid’s Effect on Political Risks for Foreign Direct Investment: A Literature Review

Re-Examining the Effects of Official Development Assistance on Foreign Direct Investment Applying the VAR Model

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