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A sector perspective on Chinese outward FDI: The automotive case

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  • Amighini, Alessia A.
  • Franco, Chiara

Abstract

We provide a sector perspective on the drivers of Chinese outward foreign direct investments (ODI) by analyzing the automotive sector over the years 2006–2011. Following the widespread literature on host-country determinants of foreign direct investments (FDI), we distinguish among economic, institutional and technological factors. We find that Chinese automotive ODI are mostly driven by the market size of host economies – a result which is robust to alternative specifications – but important non-linear effects are at work, i.e. their market-seeking investment strategies are targeted to non high-income countries. Moreover, macroeconomic stability and efficient labour markets both act as attraction factors, while the same does not seem to be true for political stability. Finally, we detect important national- and sector-agglomeration effects.

Suggested Citation

  • Amighini, Alessia A. & Franco, Chiara, 2013. "A sector perspective on Chinese outward FDI: The automotive case," China Economic Review, Elsevier, vol. 27(C), pages 148-161.
  • Handle: RePEc:eee:chieco:v:27:y:2013:i:c:p:148-161
    DOI: 10.1016/j.chieco.2013.09.002
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    2. Alessia Amighini & Claudio Cozza & Roberta Rabellotti & Marco Sanfilippo, 2014. "Investigating Chinese Outward Foreign Direct Investments: How Can Firm-level Data Help?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 22(6), pages 44-63, November.
    3. Sheng Ma & Xinxin Xu & Ziqiang Zeng & Lin Wang, 2020. "Chinese Industrial Outward FDI Location Choice in ASEAN Countries," Sustainability, MDPI, Open Access Journal, vol. 12(2), pages 1-13, January.
    4. Vito Amendolagine & Claudio Cozza & Roberta Rabellotti, 2015. "Chinese and Indian Multinationals: A Firm-Level Analysis of their Investments in Europe," Global Economic Review, Taylor & Francis Journals, vol. 44(4), pages 452-469, December.
    5. Justin Paul, 2016. "The Rise of China: What, When, Where, and Why?," The International Trade Journal, Taylor & Francis Journals, vol. 30(3), pages 207-222, May.
    6. Alessia Amighini & Roberta Rabellotti & Marco Sanfilippo, 2013. "China's Outward FDI: An Industry-Level Analysis of Host-Country Determinants," Frontiers of Economics in China, Higher Education Press, vol. 8(3), pages 309-336, September.
    7. Yakob, Ramsin & Nakamura, H. Richard & Ström, Patrik, 2018. "Chinese foreign acquisitions aimed for strategic asset-creation and innovation upgrading: The case of Geely and Volvo Cars," Technovation, Elsevier, vol. 70, pages 59-72.

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    More about this item

    Keywords

    FDI determinants; Host country factors; China; Automotive sector; Agglomeration effects;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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