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Firm Productivity and Outward Foreign Direct Investment: A Firm- Level Empirical Investigation of China

In: Outward Foreign Direct Investment of Chinese Enterprises

Author

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  • Wei Tian

    (Peking University)

  • Miaojie Yu

    (Liaoning University)

Abstract

With the implementation of China’s “going out” strategy, the country has seen a rapid increase in enterprises’ outward foreign direct investment (OFDI). Based on accurate measurement of the total factor productivity of “going out” enterprises, this chapter examines the relationship between firm productivity and OFDI using firm -level production and foreign direct investment data on manufacturing enterprises in Zhejiang province. After controlling the possible endogeneity in the regression analysis and other factors, the findings show that first, the higher is the productivity of the enterprise, the greater is the probability of foreign direct investment; second, the higher is the productivity of the enterprises, the greater is the amount of OFDI; and third, the income level of the destination country has no significant impact on the decision to invest or not. In addition, the capital intensity of the industry has no significant impact on the location of the enterprise. Therefore, the findings of this chapter provide micro -level empirical evidence for Chinese enterprises’ OFDI and, to some extent, make up for the research gap in this area.

Suggested Citation

  • Wei Tian & Miaojie Yu, 2022. "Firm Productivity and Outward Foreign Direct Investment: A Firm- Level Empirical Investigation of China," Contributions to Economics, in: Outward Foreign Direct Investment of Chinese Enterprises, chapter 0, pages 13-40, Springer.
    • Handle: RePEc:spr:conchp:978-981-19-4719-3_2
    DOI: 10.1007/978-981-19-4719-3_2
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