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The Impact of China’s Outward Foreign Direct Investment on Trade Intensity with Belt and Road Countries

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  • Yan Wu
  • Chunlai Chen

Abstract

This study uses country-level panel data covering 64 countries in the Belt and Road Initiative (BRI) for the period 2003–2015 and employs a dynamic panel system generalized method of moments (GMM) model with instrumental variable regression techniques to investigate empirically the impact of China’s outward foreign direct investment (OFDI) on trade intensity with BRI countries. The study finds that China’s OFDI on average has a positive impact on import intensity and a negative impact on export intensity with BRI countries. However, the impact of China’s OFDI on its trade intensity with BRI countries varies by country groups of resource-rich, high-income, and low-income countries in different periods. The regression results for different periods show that since the BRI was launched in 2013, China’s OFDI has strengthened bidirectional trade relations between China and BRI countries.

Suggested Citation

  • Yan Wu & Chunlai Chen, 2021. "The Impact of China’s Outward Foreign Direct Investment on Trade Intensity with Belt and Road Countries," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(6), pages 1773-1792, May.
    • Handle: RePEc:mes:emfitr:v:57:y:2021:i:6:p:1773-1792
    DOI: 10.1080/1540496X.2019.1646124
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    Cited by:

    1. Bohan Zhang & Jianfu Ma & Muhammad Asghar Khan & Valentina Repnikova & Kseniia Shidlovskaya & Sergey Barykin & Muhammad Salman Ahmad, 2023. "The Effect of Economic Policy Uncertainty on Foreign Direct Investment in the Era of Global Value Chain: Evidence from the Asian Countries," Sustainability, MDPI, vol. 15(7), pages 1-21, April.
    2. Yan Wu & Cong Hu & Xunpeng Shi, 2021. "Heterogeneous Effects of the Belt and Road Initiative on Energy Efficiency in Participating Countries," Energies, MDPI, vol. 14(18), pages 1-21, September.

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