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Geo-politics and the impact of China's outward investment on developing countries: evidence from the Great Recession

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  • Gawellek, Bastian
  • Lyu, Jingjing
  • Süssmuth, Bernd

Abstract

Using a novel dataset on Chinese large-scale overseas investment and project contracts by sector and mode of entry, we analyze whether Chinese outward activity (COA) before the Great Recession worsened or alleviated the contractionary phases in developing countries. We find that, on average, COA did not increase recessionary vulnerability. Both sectoral targeting and the size of pre-crisis engagement matter. While COA in financial market sectors implies an aggravation, substantial pre-crisis investment in energy, metals and transportation industries tends to attenuate the slump. Additionally, the mode of entry, i.e. through either greenfield investment or mergers and acquisitions, also matters.

Suggested Citation

  • Gawellek, Bastian & Lyu, Jingjing & Süssmuth, Bernd, 2021. "Geo-politics and the impact of China's outward investment on developing countries: evidence from the Great Recession," Emerging Markets Review, Elsevier, vol. 48(C).
    • Handle: RePEc:eee:ememar:v:48:y:2021:i:c:s1566014121000236
    DOI: 10.1016/j.ememar.2021.100815
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    More about this item

    Keywords

    Global crisis; Offshoring; Developing countries; Sectoral transmission;
    All these keywords.

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • F30 - International Economics - - International Finance - - - General
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development

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