The Determinants of Chinese Outward FDI in Countries Along “One Belt One Road”

Liu, Hai Yue; Tang, Yuedi; Chen, Xiao Lan; Poznanska, Joanna

doi:10.1080/1540496x.2017.1295843

Cited by 123 publications

(95 citation statements)

References 25 publications

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“…Before 2013, these countries were not the major destination of Chinese investment. After 2013, the Chinese government changed their investment policies and these countries became the hot destination of Chinese investment (Liu et al 2017).…”

Section: Introductionmentioning

confidence: 99%

The Effect of Exchange Rate Volatility on International Trade and Foreign Direct Investment (FDI) in Developing Countries along “One Belt and One Road”

Lefen

2018

IJFS

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The “One Belt and One Road” (OBOR) project was started by the Chinese government with the aim of achieving sustainable economic development and increasing cooperation with other countries. This project has five major objectives, which include (i) increasing trade flow, (ii) encouraging policy coordination, (iii) improving connectivity, (iv) obtaining financial integration, and (v) fortifying closeness between people. This paper aims to analyze the effect of exchange rate volatility on international trade and foreign direct investment (FDI) in developing countries along “One Belt and One Road”. We selected seven developing countries which are part of this project, namely Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. We collected panel data for the period 1995 to 2016 from the U.S. Heritage Foundation, International Financial Statistics (IFS) (a database developed by the International Monetary Fund), and World Development Indicators (WDI) (a database developed by the World Bank). We applied Generalized Autoregressive Conditional Heteroscedasticity (GARCH) (1,1) and threshold-Generalized Autoregressive Conditional Heteroscedasticity (TGARCH) (1,1) models to measure the exchange rate volatility. Furthermore, we employed a fixed effect model to analyze the relationship of exchange rate volatility with international trade and FDI. The results of this paper revealed that exchange rate volatility affects both international trade and FDI significantly but negatively in OBOR-related countries, which correlates with the economic theory arguing that exchange rate volatility may hurt international trade and FDI. It can be concluded that exchange rate volatility can adversely affect international trade and FDI inflows in OBOR-related countries.

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Section: Introductionmentioning

confidence: 99%

The Effect of Exchange Rate Volatility on International Trade and Foreign Direct Investment (FDI) in Developing Countries along “One Belt and One Road”

Lefen

2018

IJFS

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“…Following the preponderance of literature on FDI, [5,19,51,52], our dependent variables are the log of total FDI inflows and FDI per capita. Using the FDI per capita ratio as a dependent variable helps to adjust FDI inflows for country-specific population size and facilitates better comparisons of FDI distribution patterns [53].…”

Section: Description Of Datamentioning

confidence: 99%

Foreign Direct Investment, Natural Resources, Economic Freedom, and Sea-Access: Evidence from the Commonwealth of Independent States

Kasimov

Karimov

et al. 2020

Sustainability

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This study examines the importance of natural resources, economic freedom, and sea-access in attracting foreign direct investment (FDI) inflows to the Commonwealth of Independent States (CIS), using panel data from 1998 to 2017. The Prais-Winsten regression with panel-corrected standard errors (PCSEs) is employed for all estimations. Feasible Generalized Least Squares (FGLS), Random Effects with Driscoll-Kraay standard errors (RE (D-K)), and Random Effects of Generalized Least Squares (RE (GLS)) estimators are used to test the sensitivity of PCSEs’ estimates to changes in the underlying empirical model, whereas Instrumental Variables with Two Stage Least Squares (IV (2SLS)), Limited Information Maximum Likelihood (LIML), and Baltagi’s Two-Stage Least-Squares Random-Effects (IV (EC2SLS)) estimators are used to address potential endogeneity concerns. The estimates confirm that natural resources, economic freedom, and sea-access are robust and decisive factors affecting FDI location decisions of foreign investors in CIS. More precisely, the results suggest that increased revealed comparative advantage in petroleum, higher economic freedom characterized by the increased government size and open markets, and territorial coastlines have a statistically significant and positive effect on FDI inflows to CIS transition economies. We also find that direct access to the Black Sea and the Caspian Sea provides a significant geographic competitive advantage to Azerbaijan, Kazakhstan, Georgia, Russia, Turkmenistan, and Ukraine in attracting FDI inflows over the other CIS member-states.

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“…In recent years, China's OFDI in the form of M&As is shifting from acquiring production factors such as natural resources toward seeking advanced technology and acquiring consumptionoriented sectors for a global strategic presence (Deng, 2009). It widely accepted in the literature that firms' internationalization behaviour is shaped by home country government policy (Liu, Tang, Chen, & Poznanska, 2017). Government influence not only affects firms' willingness and capability to invest overseas, but also the investment location and types of investment that firms choose .…”

Section: Mergers and Acquisitions (Mandas)mentioning

confidence: 99%

Evolution of China’s Outward Foreign Direct Investment Regime: Implications for Southeast Asia Under the Belt and Road Initiative

Yan

Enderwick

2019

Singapore Econ. Rev.

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Assessment of the likely impact of Chinese OFDI on the ASEAN members of the Belt and Road Initiative (BRI) requires understanding of the evolution of Chinese policy, regulations and institutions. Utilizing recent developments in institutional theory, this paper examines the interplay between China’s OFDI regulations and enterprise supportive policies. Liberalization of FDI regulations complements policies of technological catch-up and the development of regionally focused multilateral institutions. Evidence of an increasing level of Chinese OFDI since 2003, and of a larger share attracted to the BRI group, particularly the ASEAN countries, is consistent with the theorizing.

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The Determinants of Chinese Outward FDI in Countries Along “One Belt One Road”

Cited by 123 publications

References 25 publications

The Effect of Exchange Rate Volatility on International Trade and Foreign Direct Investment (FDI) in Developing Countries along “One Belt and One Road”

The Effect of Exchange Rate Volatility on International Trade and Foreign Direct Investment (FDI) in Developing Countries along “One Belt and One Road”

Foreign Direct Investment, Natural Resources, Economic Freedom, and Sea-Access: Evidence from the Commonwealth of Independent States

Evolution of China’s Outward Foreign Direct Investment Regime: Implications for Southeast Asia Under the Belt and Road Initiative

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