Chen Peiru:Institutions and Chinese Outward Foreign Direct Investment

Date of publication:2017-2-25There have been0A reader to read the article

Institutions and Chinese Outward Foreign Direct Investment: Based on Extensive Margin

Abstract    This article first gives definitions of two margins of OFDI for China and then improves ALP( 2015) decomposition model to calculate the extensive margin of Chinese provincial OFDI. On this basis,we use spatial Durbin panel model to empirically explore the impacts of home institutions on Chinese OFDI,based on the perspective of extensive investment margin. Additionally, we analyze the differences of institution effects in the east,the middle and the west from mechanism of substitutability between trans-regional and trans-national flow of capital. The results show that,firstly,there is a significant spatial autocorrelation among all provinces' extensive margins of OFDI. Secondly,government fiscal and financial support can help promote the growth of Chinese OFDI at extensive margin,while weak intellectual property protection and imperfect legal system in home country will drive out domestic capital. Apparently,the extensive margin of Chinese OFDI has institutional promotion and institutional escape phenomenon. Thirdly,the differences of initial institution endowment between the east,the middle and the west make trans-national capital flow completely or partially replaced by trans-regional flow in some areas,so that these regions' extensive margins of OFDI have different institution effects. The east has more obvious institution-escape feature while the middle shows more evidence on institution promotion. But the west has neither institutional promotion nor institutional escape phenomenon.

This paper is published in World Economy Studies, No.2, 2017.