E-commerce and foreign direct investment: pioneering a new era of trade strategies

Abstract

This study explores the dynamic interplay between foreign direct investment, e-commerce, and China’s export growth from 2005 to 2022 against the backdrop of the rapidly evolving global economy. Utilizing advanced analytical models that combine province- and year-fixed effects with fully modified ordinary least squares and dynamic ordinary least-squares methodologies, we delve into how foreign direct investment and e-commerce collectively boost China’s export capabilities. Our findings highlight a significant alignment between China’s export expansion and the global sustainable development agenda. We observe that China’s export growth transcends mere international investment and digital market engagement, incorporating sustainable practices such as effective utilization of local labor resources and an emphasis on technological advancements. This study also uncovers how knowledge capital and educational attainment positively impact export figures. A notable regional disparity is observed, with the eastern regions of China being more responsive to foreign direct investment and e-commerce influences on export trade compared to their western counterparts. This disparity underscores the need for region-specific policy approaches and sustainable strategies to evenly distribute the benefits of foreign direct investment and e-commerce. The study concludes that while foreign direct investment and e-commerce are crucial for China’s export growth, the underlying theme is sustainable development, with technological innovation and human capital being key to ongoing export success. The findings advocate for policies that balance economic drivers with sustainable development goals, ensuring both economic prosperity and environmental sustainability.