What Determines China’s FDI Inflow to South Asia?

Abstract

This study investigates empirically the determinants of China's outward foreign direct investment in South Asia. Our estimation results based on the panel data for five South Asian economies (Bangladesh, India, Nepal, Pakistan and Sri Lanka)

Natural resource or market seeking motive of China’s FDI in asia? New evidence at income and sub-regional level

“…Primary education representing human development renders insignificant positive relationship with OFDI. Among the control variables, infrastructural development has a strong positive link with OFDI from China, and the finding is consistent with prior studies conducted by (Asiedu, 2002;Cheng & Kwan, 2000;Kamal et al, 2014). Infrastructural facilities boost export performance by reducing transportation cost, rising efficiency and productivity, ultimately have a positive impact on FDI, particularly on vertical FDI.…”

“…Infrastructural facilities like transportation, telecommunication, airports, internet access, and water supply are important predictors of FDI. Countries with good infrastructure facilities attract more foreign investments, thereby exerting a positive impact on FDI inflows (Kamal et al, 2014;Liu, Tang, Chen, & Poznanska, 2017). Institutional factors are important determinants of FDI, notably in the context of developing countries.…”

“…In this regard, the economic literature relevant to OFDI from China suggests that specific features or motivations cannot be ascertained. Further, despite the fact that bulk of Chinese investment is directed to Asia, the extant research on Asia is limited and focus on selected locations like South East Asia, South Asia and Middle East e.g., studies conducted byKamal, Li, Akhmat, Bashir, and Khan (2014) and Miniesy and Elish (2017). This paper contributes to the growing literature on China's OFDI in the following ways.…”