Impact of China's Outward Foreign Direct Investment on Its Regional Economic Growth

This paper investigates the impact of China's outward foreign direct investment (OFDI) on its economic growth. By using a provincial‐level panel dataset and applying fixed‐effects and instrumental variable regression techniques, the study finds that both OFDI from provincial firms and OFDI from state‐owned enterprises have a positive impact on China's provincial economic growth. The positive impact of OFDI on provincial economic growth may be the result of reverse knowledge spillovers from OFDI to the home provincial economy through demonstration and imitation, labor movement, and backward and forward industrial linkages, thus increasing the productivity and the efficiency of home firms and promoting the growth of the home economy.     

OFDI and stock returns: Evidence from manufacturing firms listed on the Chinese A-shares market

Using data for manufacturing firms listed on the Chinese A-shares market over the 2000−16 period, this paper studies the impact of outward foreign direct investment (OFDI) on stock returns using the propensity score matching. It shows that when firms carry out OFDI for the first time, they have to deal with the risks of the overseas market; therefore, the OFDI firms show significantly higher returns. Furthermore, OFDI affects stock returns through the risk channel rather than the diversification channel; the risks OFDI firms are exposed to are mainly demand and political risks. OFDI firms face different risks than non-OFDI firms, thus investors can obtain diversification benefits by purchasing stocks of OFDI firms. In addition, investors can make diversified investments based on the seven dimensions of the nature of firms and OFDI to increase the opportunity to obtain stock returns. For firms, they can conduct on-site inspections before conducting OFDI, becoming familiar with the host country market, laws and regulations. Firms should try to choose politically and economically stable countries to invest in.     

How does outward foreign direct investment enhance firm productivity? A heterogeneous empirical analysis from Chinese manufacturing

Using an original linked firm-level panel data from Chinese manufacturing firms over the period 2002–2007, this paper examines how outward foreign direct investment (OFDI) led productivity increase of parent firms (known as the own-firm effect) changes over firm heterogeneity. Conducting propensity score matching (PSM) techniques and differences-in-differences (DID) analysis, we find strong and robust evidence that the first OFDI promotes parent firm's productivity and this effect varies substantially with the firms' characteristics. In particular, firm's absorptive capacity is essential for the own-firm effect, and the absorptive capacity related with the product innovation is more important than that of the process innovation for the own-firm effect. Also, OFDI strategies for obtaining advanced technology and investing in developed countries significantly strengthen the own-firm effect, whereas, government supports have no significant impacts on the own-firm effect.     

The economic policy uncertainty and the choice of entry mode of outward foreign direct investment: Cross-border M&A or Greenfield Investment

The paper investigates the impact of economic policy uncertainty on the choice of entry mode of enterprises' Outward Foreign Direct Investment (OFDI). Based on a framework of heterogeneous enterprises, this paper first theoretically investigates the impact mechanism. The theoretical predictions are then empirically tested using rich micro-level data of Chinese enterprises from 2000 to 2013. The empirical results show that economic policy uncertainty has a significant effect on the entry mode choice of Chinese OFDI. Specifically, when the economic policy uncertainty decreases, enterprises choose Cross-border mergers and acquisitions mode with higher propensity than the Greenfield investments mode of OFDI. Further analysis indicates that the impact is heterogeneous based on ownership type, region, factor intensity, productivity level, financing abilities, and host country development level. Statistical robustness checks strengthen our findings. Our study has implications for researchers and government policymakers, especially in developing economies similar to China. The results could help device policies that encourage enterprises to choose a specific mode of ODFI. The study also provides novel insights for Chinese enterprises to "go out" and the Chinese economy to realize high-quality development.     

企业异质性与对外直接投资区位选择——基于广东省企业层面数据的考察

运用企业异质性模型框架,对企业对外直接投资(OFDI)区位选择进行理论分析,并通过广东省企业层面数据的实证考察,进而探索中国企业生产率异质带来的OFDI区位选择差异。结果表明,进行OFDI的企业具有更高的生产率,并且企业生产率在不同区位所表现出的作用大小不同,其中在亚洲地区效应最为显著;在OFDI扩展边际上,企业生产率越高,其进行OFDI的东道国数量越多;具有更低生产率阈值的东道国,其所吸收的中国OFDI越多。本文也印证了OFDI的跨越贸易壁垒行为,即东道国实施的关税对中国企业OFDI区位选择具有显著的正效应。     

Impact of Outward Foreign Direct Investment on Chinese Manufacturing Firms' Financialization and Servitization

This study examines the impact of outward foreign direct investment (OFDI) on Chinese manufacturing firms' financialization and servitization. Using a difference-in-differences approach with propensity score matching, we found that OFDI encouraged firms' financial and service activities. The effects of OFDI on financialization were stronger for firms specializing in short-term financial assets, operating in labor and technology-intensive sectors, investing overseas to pursue production, resources and markets there, and investing in non-OECD and Belt and Road Initiative (BRI) countries. Meanwhile, firms investing overseas were more likely to provide services at the sale or postsale stages. Outward foreign direct investment has also boosted the service activities of firms operating in the technology-intensive sector by investing overseas to seek resources and markets, as well as investing in non-OECD and BRI countries. Finally, OFDI partially influenced the extent of financialization and servitization of firms by affecting their profit-making ability.     

Productivity,financial constraints and outward foreign direct investment: Firm-level evidence

This paper studies the relationship between the financial constraints and outward foreign direct investment (OFDI) of Chinese enterprises. First, we construct a theoretical model and develop a series of hypotheses to analyze how productivity and financial constraints influence firms' OFDI decisions. Then we construct a multivariate index to measure internal and external financial constraints. Using Chinese Industrial Enterprises Database as well as the Database of OFDI Firms in China, our empirical finds that both productivity and financial constraints have important impacts on firms' OFDI decisions. In addition, the marginal effect of the financial constraints increases as firms' productivity rises; an effect felt more to the private enterprises than state-owned enterprises. Empirical results also indicate that external financial constraints affect the firms' OFDI decisions more greatly than the internal financial constraints.     

Why Do Chinese Private Enterprises Seek Outward Foreign Direct Investment?

China is currently in a period of economic transformation and the reform of the factor market still lags behind that of the product market. This study explores the reasons causing China's private enterprise to expand abroad from the perspective of domestic factor market imperfection. Using data for Chinese listed firms between 2002 and 2020, it examines whether outward foreign direct investment (OFDI) has been undertaken by private enterprises as a response to domestic factor market imperfection. It finds that private enterprises located in regions with greater factor market imperfection have had a greater tendency to engage in OFDI. This effect has been more pronounced among firms with high productivity or high innovation capability, and among medium and small private enterprises.     

Outward foreign direct investment and technical efficiency: Evidence from Taiwan's manufacturing firms

This paper uses firm-level panel data from Taiwan's manufacturing industries from 1987 to 2000 to investigate the impact of outward foreign direct investment (OFDI) on the technical efficiency of the OFDI firms. Propensity score matching is used to construct an appropriate group of non-OFDI firms to compare with OFDI firms, and a metafrontier framework is subsequently used to calculate comparable technical efficiencies for both groups of firms. Our empirical results reveal that the technical efficiencies of Taiwan's manufacturing firms were increasing over the entire sample period. In addition, our results suggest that the technological advances and the technical efficiency of Taiwan's manufacturing firms are positively correlated with their OFDI activity.     

The Determinants and Motivations of China's Outward Foreign Direct Investment: A Spatial Gravity Model Approach

Abstract

The study attempts to investigate the features and determinants of China's outward foreign direct investment (OFDI) into 138 countries and Chinese firms' investment strategies over the 2003–2009 period using an augmented gravity model with spatial linkages. The respective evaluations of China's OFDI are indicative of the important role played by non-financial OFDI. At the same time, Chinese firms prefer to invest in high-tech industries in developed countries while also focusing on the extraction of natural resources around the world. The empirical findings show that the host country's economic size has a significantly positive effect in terms of promoting Chinese OFDI. Chinese firms favour a complex-vertical platform in the developed countries while they prefer a market potential foreign direct investment (FDI) surrounding the host developing countries and an export-platform FDI in the petroleum exporting countries based on the surrounding market potential effect and spatial effect. The fuel extraction motive plays a key role in China's OFDI in line with the realities of Chinese FDI strategies in recent years.     

Exporting National Champions： China＇s Outward Foreign Direct Investment Finance in Comparative Perspective

We examine the extent to which Chinese development banks have financed the globalization of China＇s ＂national champion ＂firms： specifically, through outward foreign direct investment （OFDI）. We create a database of Chinese fnance for OFDI and compare our results to the existing literature and available data on Japan, Korea and other Asian nations. We estimate the total value of China＇s OFDI finance from 2002 to 2012 at US$14Obn. As a percentage of total OFDI, China＇s lending is roughly three times higher than Japan ＇s, the previous global leader in OFDl finance. We identify two major reasons for China＇s high （31 percent） ratio of OFDl lending to total OFDI. First, China has a greater incentive to give OFDI loans than Japan or Korea ever did because its borrowers are statelowned so it can more easily channel funds to targeted areas. Second, China has a greater capacity to give OFDI loans because it has significantly higher savings and foreign exchange reserves than Japan and Korea.     

Outward FDI and efficiency in within-firm resource allocation – Evidence from firm-level data of China

With the rapid expansion of outward foreign direct investment (OFDI) in China over the last two decades, OFDI has become an increasingly important way of internationalization for firms. This paper documents how firms’ OFDI and its different patterns may affect their internal resource allocation efficiency by adopting PSM-DID method and using firm-level data of China. Our results show that China's OFDI significantly improves the overall efficiency of resource allocation within enterprises, which has a time lag effect. Furthermore, we find that different patterns of firms’ OFDI display significant heterogeneity in their performances. All results remain robust when we replace key variables with different indexes, change the matching method, recalculate parameter, and change the sample size. The key implication of the paper is that both the value and the pattern of OFDI of Chinese enterprises do have significant influences on its internal resource allocation.     

Can China's Diplomatic Partnership Strategy Benefit Outward Foreign Direct Investment?

In the context of global integration, whether a diplomatic partnership strategy can promote outward foreign direct investment (OFDI) and how it works are very important issues for China. Based on a dataset featuring China's partnerships collected from the Ministry of Foreign Affairs website, we establish an empirical framework to assess the role of China's diplomatic strategy in its OFDI arising from partnerships since 1993. The results show that the establishment or upgrade of partnerships has had a positive effect on Chinese firms’ decisions on OFDI for at least the short term, especially for firms with higher demand for policy guarantees from the government, such as non‐central firms and non‐Beijing firms. The results also show that the increase in OFDI is concentrated in host countries with higher political risks, such as developing countries, neighboring countries, and Belt and Road countries, which is consistent with China's diplomatic focus. Our research proves that China's diplomatic strategy can assist firms to invest abroad.     

“凿空之旅”泽万民:“一带一路”对外直接投资如何提高劳动收入份额

文章基于2003-2016年中国上市公司数据,采用倾向得分匹配和双重差分法（PSM-DID）探讨"一带一路"沿线对外直接投资与母国劳动收入份额之间的因果关系。实证发现,企业对外直接投资长期内整体上提高了职工的工资份额。考虑企业所处地区、行业和劳动者的异质性后,结论仍然稳健。具体而言,企业通过对外直接投资的逆向技术溢出提高了创新能力、研发投入和全要素生产率,从而提高了母国职工工资份额。此外,企业的技术进步具有高技能劳动力的偏向性,母国高技能劳动者的工资份额在企业对外直接投资中得以显著提升,但对于母国低技能劳动者的工资份额影响不显著。文章研究发现"一带一路"沿线对外直接投资对母国劳动收入份额的影响机制和具体效应提供了微观证据。     

金融发展和中国对外直接投资——基于制造业行业面板数据的分析

论文考察了东道国金融发展水平对中国制造业企业对外直接投资的影响机制。理论分析指出,东道国金融发展能够通过竞争效应和融资效应两种渠道影响中国对外直接投资,而且两种效应的作用相反。经验研究结果表明东道国金融发展所产生的融资效应要大于竞争效应,且金融发展对中国对外直接投资的促进作用具有门槛系效应,只有当行业的融资需求达到一定水平,这一促进作用才存在。另外,金融发展对于技术密集型对外直接投资的影响更加明显。     

服务型对外直接投资与企业自主创新

文章构建了一个含有中国企业服务型对外直接投资(OFDI)详细信息的微观数据集,结合2002~2017年中国A股非金融类上市企业的数据,使用倾向得分匹配法和双重差分法考察了服务型OFDI对企业自主创新水平的影响。研究发现:服务型OFDI显著促进了企业自主创新水平的提升,而且投资金额越大,促进效应越明显;异质性检验表明,高管理效率、生产型行业、投资模式是绿地投资的企业从服务型OFDI中获益更大;与纯生产型OFDI相比,服务型OFDI对企业创新的积极影响更大,两者创新效应的差异凸显了在通过"走出去"战略促进企业转型升级过程中服务型OFDI的重要地位;进一步的机制检验表明,服务型OFDI主要通过"市场规模效应""资金流效应""逆向技术溢出效应"促进母公司创新。文章研究结论对中国制定对外直接投资政策、提升企业竞争力具有重要参考价值。     

Forty Years Development of China's Outward Foreign Direct Investment: Retrospect and the Challenges Ahead

Outward foreign direct investment (OFDI) has increasingly become an important method for China to integrate into the world economy. This paper comprehensively reviews and analyzes policy development and the changing pattern of China's OFDI over the past 40 years. We divide the development into “restricted” (1978–1999), “relaxed” (2000–2016) and “regulated” (2017 onwards) stages. This paper also reviews literature on the impact of Chinese OFDI on China and host countries. Despite its generally positive effects, large‐scale and unbalanced OFDI activities have alarmed Chinese policymakers. Both developing and developed host countries have expressed their concern over national security and the misbehavior of some Chinese overseas enterprises. Therefore, greater supervision and adjustment from quantity to quality growth is necessary for the future development of China's OFDI.     

China’s quest for energy through FDI: new empirical evidence

China’s current economic development depends heavily on its access to energy resources, and it is increasingly shaping Chinese Outward Foreign Direct Investment (OFDI) in a quest for resources located abroad. The aim of this paper is to answer the two following questions: How much did the Chinese global quest for energy drive its OFDI between 2005 and 2012? And has the quest for energy been sensitive to the geographical location of the resources? We used data on Chinese OFDI from the China Global Investment Tracker, as well as diverse host countries determinants of previously tested OFDI. We measured the impact of host country energy production in the allocation of investments. Using several multivariate regression models, we demonstrate that energy resources were the main driver of Chinese OFDI in 92 host countries during the studied period, and that there was no sensitivity to the geographical location of the resources.     

The impact of China’s outward foreign direct investment on domestic innovation

This paper explores the reversal technology spillovers of outward foreign direct investment (OFDI) on Chinese firms. Combining a uniquely merged database of Chinese firm-level OFDI and patent data and applying the Propensity-Score-Method-Difference-In-Differences (PSM-DID) methodology, we find a positive causal effect of OFDI on invention patent applications. Some estimations of heterogeneous effects show that OFDI promotes invention patent applications for private enterprises but has mute impact on state-owned and foreign-owned enterprises. With respect to OFDI host countries, OFDI toward developed countries is more effective for promoting innovation activities than developing countries. Three potential transmission channels of OFDI are empirically tested: direct technology purchases, access to high-tech inputs, and international mobility of personnel. Lastly, some policy implications are raised for China’s “Going Out” strategy and the economic development driven by innovation.     

战略资产获取与中国OFDI企业的“自我选择”效应——基于中国制造业上市公司的分析

文章基于2005-2014年中国制造业上市公司数据,利用面板多元排序离散被解释变量模型,对中国战略资产获取型OFDI企业的“自我选择”效应进行实证检验。除了验证传统理论中企业基于生产率的“自我选择”效应外,检验结果还发现：中国战略资产获取型OFDI企业规模更大、多为非国有企业、多位于沿海开放城市、创新能力更强、更注重品牌塑造、长期偿债能力更强、增长速度较慢。在此基础上,更进一步考察发现：中国OFDI企业的“自我选择”效应存在着区域间和行业间的差异;通过引入金融危机虚拟变量,文章证明中国OFDI企业的“自我选择”效应在金融危机前后存在着“经济结构变动”情况。