Factor price distortion,efficiency loss and enterprises' outward foreign direct investment |
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| Institution: | 1. School of Industrial Development, Nanjing University of Finance & Economics, Nanjing 210003, China;2. School of Business, Nanjing University, Nanjing 210093, China;1. Faculty of Business, The University of Jordan/Aqaba. Aqaba, Jordan. P.O. Box 2595, Aqaba 77111, Jordan;2. Hull University Business School, University of Hull, HU6 7RX Hull, UK;3. Trinity Business School, The University of Dublin, Dublin, Ireland.;4. Trinity Business School, Trinity College, Dublin 2, Ireland;1. King''s Business School, King''s College London, Level 1, Bush House, 30 Aldwych, London WC2B 4BG, United Kingdom;2. Department of Finance, CUHK Business School, The Chinese University of Hong Kong, Shatin, NT, Hong Kong, China |
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| Abstract: | The ways in which the factor market distortions induced by China's gradual reform affect enterprises' outward direct investment decision-making represent a topic that needs further study under the new pattern of an open economy. Based on the 2003–2007 China Industrial Enterprises Database, this paper examines the impact of factor price distortions on firms' OFDI behavior from enterprise productivity by using the intermediary effect model. The results show that: Firstly, factor price distortion will bring efficiency loss, but factor price distortion has a positive impact on enterprises' OFDI decision-making, and there is a significant intermediary effect on enterprise productivity. Secondly, there is a partial intermediary effect on enterprise productivity in China's Eastern and Central regions, and for capital price distortions, enterprise productivity in the Eastern areas has a cover-up effect. In Western regions, however, it shows a complete intermediary effect. Thirdly, compared with state-owned enterprises, factor price distortion on OFDI decision-making depends more on the intermediary role of productivity. |
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