Exchange Rate Risk, Political Environment and Chinese Outward FDI in Emerging Economies: A Panel Data Analysis

Li, Chong; Liu, Haiyue; Jin, Ying

doi:10.17265/2328-7144/2015.0506.004

Cited by 3 publications

(4 citation statements)

References 17 publications

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“…This empirical result is consistent with the findings of Li et al (2015). This may be because larger firms tend to have larger market shares and more competitive and, therefore, have a lower probability of exiting the market.…”

Section: Baseline Estimation Resultssupporting

confidence: 90%

“…The factors infl uencing foreign divestment can be classifi ed briefl y into internal and external factors. Internal factors include firm scale and age (Mata and Portugal, 2002;Belderbos, 2003;Berry, 2013;Li et al, 2015), capital intensity (Belderbos, 2003), operation performance (Haynes et al, 2003;Guo and Chen, 2011), and mode of foreign capital entry (Benito, 1997;McCloughan and Stone, 1998;Mata and Portugal, 2002). The external factors aff ecting foreign divestment mainly include the degree of industry competition (Wang and Larimo, 2015), labor costs (Belderbos and Zou, 2006;Berry, 2013;Saleem et al, 2018;Cai, 2023), and environmental regulations (Greaney et al, 2017;Perkins, 2023).…”

mentioning

confidence: 99%

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Human Capital Development and Its Influence on FDI Withdrawal: An Empirical Analysis

Li,

Tang

et al. 2023

China and World Economy

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This paper examines the causal effect of human capital expansion on the exit of foreign‐owned firms using the difference‐in‐differences method together with a quasi‐natural experiment involving the expansion of higher education in China in 1999. The expansion of human capital reduces the probability of the exit of foreign‐owned firms significantly. This conclusion remains robust under a series of tests, including changing the sample range, adjusting the identification method, and considering the trade liberalization. Analysis of the mechanism indicates that human capital expansion reduces the exit probability of foreign‐owned firms by stimulating innovation, improving production efficiency, and optimizing the quality of input and output goods. Industries with higher asset specificity are also more likely to restrain the exit of foreign‐owned firms through human capital expansion. Overall, the findings of this study provide a good insight into the exit behavior of FDI in China from the perspective of human capital.

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Section: Baseline Estimation Resultssupporting

confidence: 90%

mentioning

confidence: 99%

Human Capital Development and Its Influence on FDI Withdrawal: An Empirical Analysis

Li,

Tang

et al. 2023

China and World Economy

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“…Interestingly, many studies discovered that Chinese ODI is attracted to countries with high political risk (Buckley et al, 2007;Kolstad & Wiig, 2012;Amighini et al, 2011;Li, Liu, & Jiang, 2015). Meanwhile, Amighini et al ( 2011) provide an explanation that Chinese firms might prefer countries with high corruption because rents from natural resources are more easily obtained there, which also corresponds with Kolstad and Wiig (2012) findings that natural resources are usually coupled with bad institutions, a phenomenon also known as 'resource curse'.…”

Section: Usdmentioning

confidence: 95%

Determinants of Chinese Foreign Direct Investment in Central and Eastern Europe

Dayeh¹,

Janíčko²

2021

CEBR

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The article deals with China's outward direct investment (ODI) in Europe. The ODI has been on the rise and is unique in the sense that its development is much faster than of any other developing country. We investigate the determinants of Chinese ODI in ten countries of the Central and Eastern Europe in the time span of 2005 and 2018. Using panel data analysis, the regression model incorporates both traditional macroeconomic variables as well as selected institutional variables, trying to test which of those work best at explaining the Chinese investment activity in the countries of interest. The quality of the institutional framework is represented by EBRD indicators, which seem to be more suitable for transition economies. Findings generally suggest that Chinese multinational enterprises do not access Central and Eastern European countries primarily for market-seeking reasons. However, the fact of being a member of the EU helps Chinese ODI, since the membership is used as a sort of "backdoor" to the large European markets. Still, Chinese ODI are less likely associated with a sound institutional environment of a host country, as opposite appears to be true. These findings, therefore, support the hypothesis that access to the single EU market and R&D spending are more important determinants of the Chinese ODI than almost any other factors. Implications for Central European audience: The article explores the main drivers of Chinese foreign direct investment in the CEE region, while it employs the most relevant theoretical framework, including several recently developed theories. The quantitative analysis then thoroughly explores weight and sign of selected drivers using recent data and questions some of the conventionally accepted surmises about motivations of Chinese investment activity in the CEE region. This is an important topic given the ongoing debates about China's influence in the region as well as about intensity and general value added of its investment activity.

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“…The UNCTAD is the principal source for the FDI, inflation, and population elements. The crucial operationalized element in the FDI component is the net inward FDI stock assessed in millions of current US dollars, transformed into real FDI inflow through dividing FDI by the host nation's consumer price index (CPI, 2010 = 100), adapting a similar methodology by Li et al (2015). The inward FDI stock data progressively protects the actualization of flows in the host country-state, and are slightly unsteady than flows (Gwenhamo, 2011;Júlio et al, 2013;Kerner & Lawrence, 2014).…”

Section: Datamentioning

confidence: 99%

Environmental Pollution and Economic Growth Determinants in Foreign Direct Investment Inflows: The Case for Sub-Saharan Sierra Leone

Mansaray

2023

IJARBSS

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The primary objective of the present research was the examination of environmental pollution, economic growth, and supplementary selected macroeconomic elements as determinants of foreign direct investment inflows into Sub-Saharan Sierra Leone for the postconflict period, 2002-2020, and whether the association between the determinants and foreign direct investment is long-term and short-term. The research methodology was quantitative, and the dataset was time series with 76 observations and 10 variables. Using the AR(2) model, the findings indicated the lags of foreign direct investment, gross fixed capital formation, carbon dioxide, trade, and population growth were significant determinants of foreign direct investment inflows. Furthermore, applying the Phillips-Ouliaris cointegration model, the results indicated a statistically significant long-run association between foreign direct investment and, at least, one determinant (Rho = -39.458, Tau = -5.024, p < .05). Additionally, the error correction model (errorECM1) applied to explore the short-run deviation from the long-run had the expected sign, and was statistically significant (βerrorECM1 = -.524, SE = .158, t = -3.31, p = .002), representing a speedy conversion movement to long-run equilibrium of about 52.4% annually. Nonetheless, the research restricted itself to 19 post-conflict years (2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016)(2017)(2018)(2019)(2020), which may be inadequate to recognize the comprehensive determinant of foreign direct investment inflows. Succeeding studies must embrace additional years, including pre-conflict periods, to recognize the comprehensive determinants of foreign direct investment inflows into Sub-Saharan Sierra Leone.

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Exchange Rate Risk, Political Environment and Chinese Outward FDI in Emerging Economies: A Panel Data Analysis

Cited by 3 publications

References 17 publications

Human Capital Development and Its Influence on FDI Withdrawal: An Empirical Analysis

Human Capital Development and Its Influence on FDI Withdrawal: An Empirical Analysis

Determinants of Chinese Foreign Direct Investment in Central and Eastern Europe

Environmental Pollution and Economic Growth Determinants in Foreign Direct Investment Inflows: The Case for Sub-Saharan Sierra Leone

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