Belt and road initiative and Chinese firms' outward foreign direct investment

Yu, Shu; Qian, Xingwang; Liu, Taoxiong

doi:10.1016/j.ememar.2019.100629

Cited by 136 publications

(100 citation statements)

References 38 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Therefore, it appears that the Chinese government functions well in the area where domestic firms need outside assistance, thereby compensating for the disadvantages of the firms in the internationalization process. By discovering the positive moderating role of the Chinese government in increasing domestic firms' international revenue through OFDI, our study goes one step further by confirming political connections' effect on the outcome of domestic firms' internationalization, thereby extending knowledge offered by existing studies such as that of [71] that focused on the relationship between Chinese government and the OFDI of domestic firms.…”

Section: Discussionsupporting

confidence: 66%

Impact of Political Connection Strength on the Internationalization Outcome of Chinese Firms: Perspectives from Market Exploration and Technology Acquisition

Zhang

Huang

2020

Sustainability

View full text Add to dashboard Cite

Although the role of a home country's government in firms' internationalization processes has been investigated, there is a gap in the literature concerning the effectiveness of the government's effort. Based on the data of 1996 Chinese listed firms, this study investigates how the strength of Chinese firms' political connection with their home country government impacts the outcomes of their internationalization activities. These activities are classified into market exploration and technology acquisition. We establish an index to measure the firms' political connection strength and find that it exhibits a bimodal distribution, which indicates that some firms maintain a close relationship with the government, while the business activities of others are distant from the government. The strength of the political connection has different moderating effects on firms' internationalization processes when either the international market context or the firms' internationalization activities vary. A strong political connection is beneficial for firms to explore the markets and acquire beneficial technology from developed countries. Compared with its role in exploring international markets, political connection plays a more significant moderating role in augmenting the positive effect of international technology acquisition on firms' innovation capability. Therefore, Chinese firms may perform better in the internationalization process if they maintain a close relationship with the Chinese government, which engages in promoting the internationalization of domestic firms through an array of policies that may compensate for the firms' disadvantages. Our results show the mechanism through which emerging countries' governments use directives and incentives to facilitate the internationalization of domestic firms.

show abstract

Section: Discussionsupporting

confidence: 66%

Impact of Political Connection Strength on the Internationalization Outcome of Chinese Firms: Perspectives from Market Exploration and Technology Acquisition

Zhang

Huang

2020

Sustainability

View full text Add to dashboard Cite

show abstract

“…China, as an emerging economy expanding the major provider of foreign direct investment (FDI), has been phenomenally drawing global attention (Yu et al, 2019). The outward FDI and international trade flow from China accelerating globally have changed the world economic architecture and international political landscape by providing the unique greatest version of regional and global economic governance strategy (Du and Zhang, 2018;Huang, 2016).…”

Section: Introductionmentioning

confidence: 99%

“…The BRI was launched in late 2013 by President Xi Jinping, composed of the "Silk Road Economic Belt" and the "Maritime Silk Road" based on cross-border infrastructure development to reduce the transportation cost by connecting China across countries (Aoyama, 2016;Shahriar et al, 2019;Zhao, 2019). Afterward, the BRI has been drawing the global horizon and debatable issues for researchers, policymakers, governments, international organizations, and media pundits (Aoyama, 2016;Yu et al, 2019).…”

Section: Introductionmentioning

confidence: 99%

“…Accordingly, Chinese outward investment of USD$1 billion in 1991 was accelerated to USD$196.2 billion in 2016 and the total stock stood USD$1809.04 billion in 2017 in the global arena (MOFCOM, 2017;Shahriar et al, 2019;Wang and Gao, 2019). Besides, as the BRI heavily promoted, it facilitated additional energy to inject Chinese OFDI across countries (Du and Zhang, 2018;Yu et al, 2019). Thus, the Chinese OFDI annual flow to the BRI countries accelerated to USD$20.17 billion and the total stock stood to USD$154.40 billion in 2017 (Chen et al, 2019).…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Analysis of the Bri and China’s Ofdi in Sub-Saharan Africa

Wang¹,

Lu²,

Zhang³

et al. 2020

Singapore Econ. Rev.

View full text Add to dashboard Cite

The “Belt and Road Initiative” (BRI) has been launched by the Chinese government in 2013. The aim was to stimulate cross-border economic development in massive geographical areas covering Asia, Oceania, Europe, Africa, and Latin America which accounts for 80% and 40% of the world population and gross domestic product (GDP), respectively. The BRI has devised an extension of the “going global” strategy to reconfigure China’s overseas sector in order to extend its spillovers, and create more development opportunities for participating countries. In practice, cross-border infrastructure was a comprehensive role to reduce transportation cost; however, the BRI was vast by nature that includes financial support, policy cooperation, investment, trade facilitation, and people-to-people exchanges for the humanitarian strategy. Against this backdrop, the overarching objective of this study was to analyze the impact of the BRI and Chinese outward foreign direct investment (OFDI) on the bilateral trade between China and Sub-Saharan Africa countries. The investigation was carried out using a trade gravity model, balanced panel dataset, and multivariate regression estimation strategy for robustness checks covering 16 years. The result showed that Chinese OFDI, home, and host country’s GDP and GDP per capita income variables have a positive and statistically significant impact on the bilateral trade. Moreover, the BRI has explained positively on the bilateral trade; however, it does not have enough evidence to stimulate significantly, and it usually takes a long time for the effects of the BRI investment on trade and OFDI. The study also found that geographical distance and official exchange rates have explained negatively and statistically significant impact on the bilateral trade.

show abstract

“…For example, Shen and Jin (2018) studied the impact of the institutional difference complementary effect of the BRI on the OFDI behavior of firms based on China's OFDI micro samples, but in their empirical model, they only used time variables to represent the implementation of the policy, which made the validity of the empirical results challenging, because it is difficult to believe that the effects identified based on this model are caused by the BRI rather than other unobservable time-related factors. On the other hand, the latest studies, such as Yu, Qian, and Liu (2019) and Lv, Lu, Wu, and Wang (2019), used a more rigorous causal inference method in the identification of the promotion effect of BRI on OFDI at firm level. However, in the empirical analysis, it takes the host country rather than the firm itself as the individual research object.…”

Section: Asian Economic and Financial Reviewmentioning

confidence: 99%

Untitled

2020

Asian Economic and Financial Review

View full text Add to dashboard Cite

Based on the dataset of listed companies in China from 2014 to 2017, this study uses difference in differences (DID) and propensity score matching (PSM) approaches to systematically evaluate the promotion effect of China's Belt and Road Initiative (BRI) on Chinese firms' outward foreign direct investment (OFDI). The empirical findings are as follows: (a) after the initiative, listed Chinese firms have significantly increased OFDI in countries along the Belt and Road, but this result cannot be clearly attributed to the implementation of the policy; (b) compared with firms that have already invested in countries along the Belt and Road, the initiative has strongly encouraged uninvested listed firms to invest along the BRI routes; (c) the new entry incentives of OFDI firms have industry differences in investment choices; (d) the shareholding ratio of stateowned investors has no impact on the policy effect. Based on the findings, we put forward some policy recommendations to help firms invest in the countries along the Belt and Road better. Contribution/Originality: This study is one of very few empirical studies that have investigated the promotion effect of the Belt and Road Initiative on China's foreign direct investment at firm level.

show abstract

Belt and road initiative and Chinese firms' outward foreign direct investment

Cited by 136 publications

References 38 publications

Impact of Political Connection Strength on the Internationalization Outcome of Chinese Firms: Perspectives from Market Exploration and Technology Acquisition

Impact of Political Connection Strength on the Internationalization Outcome of Chinese Firms: Perspectives from Market Exploration and Technology Acquisition

Analysis of the Bri and China’s Ofdi in Sub-Saharan Africa

Untitled

Contact Info

Product

Resources

About