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China’s outward FDI efficiency along the Belt and Road

Author

Listed:
  • Zhaobin Fan
  • Ruohan Zhang
  • Xiaotong Liu
  • Lin Pan

Abstract

Purpose - The purpose of this paper is to estimate the China’s outward FDI efficiency and it determinants in 69 countries along the Belt and Road over the period of 2003-2013. Design/methodology/approach - This paper defines the extent of the Belt and Road in terms of geographical boundaries, justifying the application of the stochastic frontier gravity model to the FDI analysis, and then constructing a frontier regression model to assess the China’s outward FDI efficiency and it determinants in countries along the Belt and Road. Findings - Regarding the core gravity parameter estimates, China’s outward FDI was highly consistent with the gravity model. As far as policy parameters are concerned, China’s outward FDI was significantly restricted by some man-made barriers in host countries. According to the estimated FDI efficiency scores, China has huge outward FDI potential in countries along the Belt and Road. In general, China’s outward FDI efficiency demonstrated a consistent uptrend from the perspectives of both FDI flows and stocks over the period of 2003-2013. Although China’s outward FDI performance indicated a very uneven pattern across different countries and periods, there were no significant performance differences between the Road and Belt. Practical implications - The Belt and Road initiative can be largely beneficial to China’s outward FDI, but the specific framework of cooperation should be designed on the basis of determinants of China’s outward FDI. The regional cooperation with the Road countries should mainly focus on the removal of business barriers and financial barriers. The regional cooperation with the Belt countries should mainly concern the improvement of local intellectual property protection, the reduction of local tax burden, and removal of business barriers and financial barriers. Originality/value - To the authors’ best knowledge, no existing literature has specifically examined the efficiency of China’s outward FDI in the countries along the Belt and Road and its determinants.

Suggested Citation

  • Zhaobin Fan & Ruohan Zhang & Xiaotong Liu & Lin Pan, 2016. "China’s outward FDI efficiency along the Belt and Road," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 8(3), pages 455-479, September.
    • Handle: RePEc:eme:caerpp:v:8:y:2016:i:3:p:455-479
    DOI: 10.1108/CAER-11-2015-0158
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    Citations

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    Cited by:

    1. Leng, Zhihui & Shuai, Jing & Sun, Han & Shi, Zhiyao & Wang, Zihan, 2020. "Do China's wind energy products have potentials for trade with the “Belt and Road” countries? -- A gravity model approach," Energy Policy, Elsevier, vol. 137(C).
    2. Nathapornpan Piyaareekul Uttama & Rapipong Promnart, 2022. "Shadow economy and the efficiency of FDI inflow: the case of ASEAN economies," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 23(2), pages 136-155.
    3. Quan He & Xishen Cao, 2019. "Pattern and Influencing Factors of Foreign Direct Investment Networks between Countries along the “Belt and Road” Regions," Sustainability, MDPI, vol. 11(17), pages 1-23, August.
    4. Degong Ma & Chun Lei & Farid Ullah & Raza Ullah & Qadar Bakhsh Baloch, 2019. "China’s One Belt and One Road Initiative and Outward Chinese Foreign Direct Investment in Europe," Sustainability, MDPI, vol. 11(24), pages 1-13, December.
    5. Yahui Chen & Changsheng Xu & Ming Yi, 2019. "Does the Belt and Road Initiative Reduce the R&D Investment of OFDI Enterprises? Evidence from China’s A-Share Listed Companies," Sustainability, MDPI, vol. 11(5), pages 1-14, March.
    6. Mengjun Xie, 2018. "Can Cultural Affinity Promote Trade ? HSK Test Data from the Belt and Road Countries," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 26(3), pages 109-126, May.
    7. Shuzhong Ma & Mengheng Liu, 2020. "Spatial correlation effect of China's outward foreign direct investment in countries along the One Belt and One Road," Pacific Economic Review, Wiley Blackwell, vol. 25(2), pages 228-249, May.

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