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Investment facilitation and China's outward foreign direct investment along the belt and road

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  • Chen, Jiyong
  • Liu, Yishuang
  • Liu, Wei

Abstract

This study provides a comprehensive and accurate measurement of investment facilitation in 66 countries along the Belt and Road from 2007 to 2018. The expanded gravity model analyzes the impact of host country investment facilitation on China's outward foreign direct investment, and the panel threshold model examines the nonlinear relationship between investment facilitation and outward foreign direct investment. The results indicate significant differences in the level of investment facilitation among countries along the Belt and Road. Overall, spatial distribution characteristics are higher in East Asia, Southeast Asia, and Europe compared to other regions. An increase of 1% in the level of investment facilitation provided by the host country can generally promote a 2.173% increase in China's outward foreign direct investment. Market size (GDP) and technological progress rate (Tec) were used as thresholds for dividing countries along the Belt and Road into four economic regions. Countries in the different economic regions have different levels of sensitivity to investment facilitation and first-level indicators. Currently, Chinese outward foreign direct investment is based on market acquisition but will be based on technological upgrading in the future.

Suggested Citation

  • Chen, Jiyong & Liu, Yishuang & Liu, Wei, 2020. "Investment facilitation and China's outward foreign direct investment along the belt and road," China Economic Review, Elsevier, vol. 61(C).
    • Handle: RePEc:eee:chieco:v:61:y:2020:i:c:s1043951x20300559
    DOI: 10.1016/j.chieco.2020.101458
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    4. Ouyang, Shanshan & Li, Yanxi & Wu, Haowen & Zhao, Heng & Xu, Runxiang, 2023. "Structure and evolution of the greenfield FDI network along the belt and road," Research in International Business and Finance, Elsevier, vol. 64(C).
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    6. Jiatao Li & Ari Van Assche & Xiaolan Fu & Lee Li & Gongming Qian, 2022. "The Belt and Road Initiative and international business policy: A kaleidoscopic perspective," Journal of International Business Policy, Palgrave Macmillan, vol. 5(2), pages 135-151, June.
    7. Nugent, Jeffrey B. & Lu, Jiaxuan, 2021. "China's outward foreign direct investment in the Belt and Road Initiative: What are the motives for Chinese firms to invest?," China Economic Review, Elsevier, vol. 68(C).
    8. Wiesława Lizinska & Roman Kisiel & Alina Zrobek-Rozanska, 2020. "Foreign Direct Investment in Poland and Changes in the Branch Structure," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 1), pages 201-214.
    9. Wei Yang & Feihuang Xue & Jinfeng Shi & Yanmin Shao & Di Wang, 2021. "Factors Affecting the Trade Dependence Relationship of Asian Countries with China: Implications for China’s Belt and Road Initiative," Sustainability, MDPI, vol. 13(19), pages 1-23, September.
    10. Shi, Buchao & Huang, Liangxiong & Wei, Shengmin & Geng, Xinyue, 2022. "Overseas industrial parks and China's outward foreign direct investment," Journal of Asian Economics, Elsevier, vol. 83(C).
    11. Liu, Wei & Zhao, Zhihui & Wen, Zhao & Cheng, Shixiong, 2022. "Environmental regulation and OFDI: Evidence from Chinese listed firms," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 191-208.
    12. Ning Zhu & Xiang Dai & Tomas Baležentis & Dalia Streimikiene & Zhiyang Shen, 2022. "Estimating production gains from international cooperation: Evidence from countries along the Belt and Road," Economic Change and Restructuring, Springer, vol. 55(2), pages 715-736, May.
    13. Yang, Yiwen & Lin, Chinho, 2021. "Impact of the “Belt and Road Initiative” on machinery production networks," Economic Modelling, Elsevier, vol. 104(C).
    14. Zhai, Wei, 2023. "Risk assessment of China's foreign direct investment in "One Belt, One Road": Taking the green finance as a research perspective," Socio-Economic Planning Sciences, Elsevier, vol. 87(PB).

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