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Influence of financial inclusion and industrial robots on the efficiency of China's OFDI: A heterogeneous spatial stochastic frontier analysis

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  • Cao, Qiang
  • Xu, Aiyan
  • Wang, Jiawen
  • Yu, Wenmei

Abstract

Enhancing the efficacy of China's outward foreign direct investment (COFDI) constitutes a significant avenue for realizing the sustainable development of China's economy. This study analyzes panel data from 63 countries from 2010 to 2021 to create a heterogeneous spatial stochastic frontier model to examine how financial inclusion and industrial robotics in host nations affect COFDI efficiency. The findings are as follows. To begin with, COFDI manifests positive spatial spillover effects across countries. Moreover, from a spatial perspective, financial inclusion diminishes COFDI efficiency, whereas the interaction between financial inclusion and industrial robots increases its efficiency. Industrial robots, thus, counteract the diminishing impact of financial inclusion on COFDI efficiency. Additionally, concerning the heterogeneity of location choice and investment motivation in COFDI, the interaction between financial inclusion and industrial robots in developed economies augments COFDI efficiency as opposed to emerging market economies. Conversely, technology-seeking investment mitigates the adverse effects of financial inclusion on the efficacy of COFDI when juxtaposed with resource-seeking investment. This study provides theoretical insights and practical recommendations for improving the efficiency and guiding the destination selection of COFDI.

Suggested Citation

  • Cao, Qiang & Xu, Aiyan & Wang, Jiawen & Yu, Wenmei, 2024. "Influence of financial inclusion and industrial robots on the efficiency of China's OFDI: A heterogeneous spatial stochastic frontier analysis," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 996-1009.
    • Handle: RePEc:eee:ecanpo:v:84:y:2024:i:c:p:996-1009
    DOI: 10.1016/j.eap.2024.10.020
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    More about this item

    Keywords

    COFDI; Financial inclusion; Industrial robots; Heterogeneous stochastic frontier model; Spatial autoregression;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • L64 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Machinery; Business Equipment; Armaments
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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