Does internet security matter for foreign direct investment? A spatial econometric analysis

Sister‐city Ties and Chinese Outward Foreign Direct Investment: A Spatial Econometric Analysis

“…Recent studies have emphasized that the location choice is spatially correlated (Blanc-Brude et al, 2014;Regelink and Elhorst, 2015;McDonald et al, 2018;Huang et al, 2021) and argued that OFDI location choice can be aff ected by locations of neighboring regions (Blanc-Brude et al, 2014;McDonald et al, 2018). This is the third theory used in our analysis.…”

“…To capture the neighboring effect of OFDI location choice, a DSD model is employed, as in Equation ( 2). This is a good solution for exploring nonisolated locations and has been widely used in recent studies on FDI spatial analysis (Regelink and Elhorst, 2015;Lin and Kwan, 2017;Huang et al, 2021). 3 Specifically, as our focus, the spatially lagged independent term Σ J j = 1, j ≠ i w ij SC jt is used to identify cross-country spillovers of sister-city ties from neighboring countries.…”

“…As the model is not a standard spatial Durbin specifi cation, there is some controversy regarding its estimation technique(Jocobs et al, 2009;Lee and Yu, 2010). To obtain reliable estimation results, we employ the setting approach of the DSD model used in relevant FDI studies(Regelink and Elhorst, 2015;Lin and Kwan, 2017;Huang et al, 2021), that is, the spatial lag items of the core independent variable and FDI are embedded in the DSD model, but the spatial lags of other controls are not incorporated. This specifi cation has two advantages.…”