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Impact of productivity revolution on Chinese enterprises’ outward foreign direct investment (OFDI)

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  • Ma, Peng
  • Tan, Ya
  • Xu, Feng

Abstract

Against the current wave of digital and intelligent transformation, understanding how productivity revolution drives outward foreign direct investment (OFDI) has become essential for building a new development framework. Drawing on data from Chinese A-share listed firms spanning 2011 to 2022, this research investigates the mechanisms and variations in how productivity advances affect OFDI. The results show that such revolutions substantially raise OFDI levels by building technological advantages, improving risk management, and strengthening supply chain cooperation. These conclusions remain reliable after addressing endogeneity concerns and conducting a series of robustness tests. Further examination suggests that productivity gains stimulate OFDI by strengthening innovation potential and alleviating financial limitations. Additionally, heterogeneity analysis reveals that the effect is stronger among non-state enterprises, highly competitive industries, and firms based in eastern regions. This research expands the theoretical framework for understanding enterprise internationalization in the digital economy era and offers three policy implications for decision-makers—(1) accelerating the contextual application of core technologies of productivity revolution, such as artificial intelligence (AI) and the Internet of Things (IoT); (2) implementing differentiated investment support policies for enterprises based on ownership structure and regional characteristics; and (3) improving the cross-border financial service system to strengthen the synergistic effects between productivity revolution and global resource allocation.

Suggested Citation

  • Ma, Peng & Tan, Ya & Xu, Feng, 2026. "Impact of productivity revolution on Chinese enterprises’ outward foreign direct investment (OFDI)," Economic Analysis and Policy, Elsevier, vol. 90(C), pages 60-82.
    • Handle: RePEc:eee:ecanpo:v:90:y:2026:i:c:p:60-82
    DOI: 10.1016/j.eap.2026.01.002
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