Overseas industrial parks and China's outward foreign direct investment |
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Institution: | 1. School of Economics, Nankai University, Tianjin 300071, China;2. School of Economics and Finance, South China University of Technology, Guangzhou 510006, China;3. Chinese Academy of Fiscal Sciences, Beijing 100142, China |
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Abstract: | We manually collect data on China's overseas industrial parks from 2007 to 2018, and match it with data on the country’s outward foreign direct investment (OFDI), using the system generalized method of moment (system GMM) approach to test how constructing overseas industrial parks affects China's OFDI. The results indicate that each new overseas industrial park established significantly increases China's OFDI by 2.89%. And the effect only exists in non-high-income host countries, rather than high-income host countries. We also investigate the effects of different types of industrial parks, and find that agricultural, light industrial, high-tech, comprehensive and heavy industrial parks have significant effects, while logistics parks do not. The mechanism analysis suggests that establishing overseas industrial parks increases China’s OFDI by reducing host countries’ economic and financial risks, and improving bilateral political relations. We further find that establishing overseas industrial parks is more likely to promote OFDI in host countries with imperfect infrastructure, impeded capital flows and low levels of unimpeded information. Our findings shed light on how developing countries could enlarge and stabilize OFDI. |
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Keywords: | Overseas industrial park Outward foreign direct investment Country risk The mediation effect |
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