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The exceptional performance of Chinese outward direct investment firms

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  • Wei Tian
  • Miaojie Yu
  • Fan Zhang

Abstract

This paper finds that Chinese manufacturing firms that engage in outward foreign direct investment (ODI) have better economic performance than non-ODI manufacturing firms. Overall, ODI firms are more productive and have higher profitability than non-ODI firms. The sector analysis shows that the exceptional performance is significant for labor-intensive industries. Finally, the ODI activity can raise the productivity of other firms in an industry. The larger the ODI within an industry, the higher the productivity of all firms in that industry. The paper suggests that domestic firms set up their firm’s global strategy and reallocate the firm’s resources according to the changing investment environment, taking advantages of profit opportunities outside of domestic markets and invest abroad to get new markets and new technology.

Suggested Citation

  • Wei Tian & Miaojie Yu & Fan Zhang, 2016. "The exceptional performance of Chinese outward direct investment firms," China Economic Journal, Taylor & Francis Journals, vol. 9(2), pages 209-219, May.
    • Handle: RePEc:taf:rcejxx:v:9:y:2016:i:2:p:209-219
    DOI: 10.1080/17538963.2016.1172783
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