Harmony in Diversity: Can the One Belt One Road Initiative Promote China’s Outward Foreign Direct Investment?

Abstract

This paper investigates the effect of the One Belt One Road (OBOR) initiative on China's outward foreign direct investment (OFDI) using a dataset of all host countries for the period of 2010-2015. The employed econometric technique combines a difference-in-differences estimator with matching techniques. The results show that China's OFDI in OBOR countries is about 40% higher than in non-OBOR countries. After the initiative, the OFDI from China increases by 46.2% in OBOR countries. However, after controlling for the heterogeneity across OBOR and non-OBOR countries using the matching approach, the significance of the increasing effect caused by the OBOR initiative disappears. We also find the OBOR initiative diminishes the resource-seeking motivation and improves the market-seeking motivation of China's OFDI. Our results cast doubts on the infrastructure-led and institution-based strategy of the OBOR initiative, but support the boosting effect of the OBOR initiative on institutional cooperation and cultural convergence. Thus, the OBOR initiative is a sustainable continuation and development of the long tradition of economic, institutional, and cultural convergence with the OBOR countries, rather than a temporary policy shock.

Evaluation of the Obstacles to Developing the Aynak Copper Mine in Afghanistan

“…This study assessed the degree of administrative capacity, labor investment, labor productivity, capital investment, efficiency of capital, terroristic activities, and issues of religion in relation to the developing process of the Aynak Copper Mine project in Afghanistan. In line with previous research on economic collaboration [2,[22][23][24] and Afghanistan [1, [25][26][27][28], the major finding of this current research is that the progressive process of developing the Aynak Copper Mine project is strongly associated with the factors of DAC, TAs, and RIs. One of the most significant results showed that a lack of strong administrative capacity may be an obstacle in developing the Aynak Copper Mine.…”

“…As Table 1 shown, we collected data from the six groups of stakeholders and then we placed them into five categories: None or few (0-20), not too much (21)(22)(23)(24)(25)(26)(27)(28)(29)(30)(31)(32)(33)(34)(35)(36)(37)(38)(39)(40), neutral (41-60), partial (61-80), and very much (81-100). Among the 2563 responses related to the DAC, 62 people (2.4%) realized that the Afghan Government has no or few DACs to influence the development process of the Aynak Copper Mine, and 524 (20.4%) considered that there is not too much the DAC of the Afghan Government can do with the development of the Aynak Copper Mine.…”

Envisioning the Impact of the Belt and Road Initiative on Regional Labor Markets

“…Z. Liu, Wang, Sonn, and Chen (2018) examine the structure and changes in trade relations networks with the development of the BRI [6]. Kang, Peng, Zhu, and Pan (2018) investigate the influence of the BRI on China's outward foreign direct investment [7]. These investigations show the external economic environment of a region under transformation.…”

China’s Outward FDI in Indonesia: Spatial Patterns and Determinants

“…The motives and the purpose of the "Belt and Road" initiatives reduced the resource-seeking motivation and boosted the market-seeking motivation of China's OFDI [3]. Promoting economic integration in a large geographical coverage and economic size through the "Belt and Road" has emerged an important new economic point of view and it also contributes to the development of the world [4].…”

“…Indonesia's ambition to become the "Global Maritime Fulcrum" will be in line with the interests of the "Belt and Road" program, which has both direct and indirect implications and impacts on economic interests between China and Indonesia [10]. In fact, Chinese investments are mostly in the maritime silk road countries [3]. Leitao discovered that there is a positive correlation between FDI (Foreign Direct Investment) and bilateral trade promoting the economic growth in host countries [11].…”