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China's outward foreign direct investment and bilateral export sophistication: a cross countries panel data analysis

Author

Listed:
  • Faheem Ur Rehman
  • Abul Ala Noman

Abstract

Purpose - China's outward foreign direct investment (OFDI) has risen remarkably over the past two decades. Does such increase affect the sophistication of Chinese exports, is a significant issue that has surprisingly remained unaddressed? The purpose of this study is to investigate the impact of Chinese OFDI on bilateral export sophistication of China and its OFDI receiving partner countries during 2003–2017 by applying Poisson pseudo-maximum likelihood approach based on gravity model. Design/methodology/approach - The analysis has been performed for total sample, region-wise grouped sample (Europe and Central Asia, Middle East and North Africa, Latin America and Caribbean, East Asia and Pacific, South Asia, North America and sub-Saharan Africa) and income-wise grouped sample (high income, upper middle income, lower middle income and lower income group sample). Findings - The results confirmed the significant and positive effect of Chinese OFDI on bilateral export sophistication in total sample, regions-wise and income groups sample. Originality/value - The study provides a helpful suggestion regarding policy towards achieving more sophistication in export and thus to achieve comparative advantage in trade.

Suggested Citation

  • Faheem Ur Rehman & Abul Ala Noman, 2021. "China's outward foreign direct investment and bilateral export sophistication: a cross countries panel data analysis," China Finance Review International, Emerald Group Publishing Limited, vol. 12(1), pages 180-197, January.
    • Handle: RePEc:eme:cfripp:cfri-04-2020-0040
    DOI: 10.1108/CFRI-04-2020-0040
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    Citations

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    Cited by:

    1. Peng, Dan & Ji, Y. & Kong, Qunxi, 2023. "OFDI and firms' sustainable productive capacity: Evidence from Chinese industrial firms," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 641-652.
    2. Chen, Lin & Cheng, Chen, 2023. "Emigration and outward FDI in China: Key role of institutional quality," Finance Research Letters, Elsevier, vol. 51(C).

    More about this item

    Keywords

    Export sophistication; OFDI; PPML; Gravity model; China; E23; F14; F21; O10;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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