CHINESE OUTWARD FDI: IMPLICATIONS TO THE HOST COUNTRIES’ ECONOMIC GROWTH
Keywords:
Outward FDI, Economic Growth, “The Belt and Road” Initiative, SYS-GMMAbstract
The Belt and Road (B&R) initiative, introduced in 2013, has led to a noticeable increase in China's outward foreign (OFDI) in the B&R countries. This paper aims to investigate the impacts of the Chinese OFDI investment on economic growth in the B&R countries. This study covers 55 B&R countries during 2006-2018. This paper applies the SYS-GMM model to estimate the empirical results. The results show that the Chinese OFDI could promote economic growth in the B&R countries, especially after the B&R initiatives. However, the country's government debt is the critical factor in enhancing the role of such OFDI on economic growth in those countries. Technological development, degree of trade openness, and labor market conditions in the B&R countries are crucial in promoting their economic growth
References
Anwar, S., & Nguyen, L. P. (2010). Foreign direct investment and economic growth in Vietnam. Asia Pacific Business Review, 16(1-2), 183-202. https://doi.org/10.1080/10438590802511031Arellano, M., & Bond, S. (1991). Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. The Review of Economic Studies, 58(2), 277-297. https://doi.org/10.2307/2297968Barro, R. J. (1979). On the Determination of the Public Debt. Journal of Political Economy, 87(5), 940-971. https://doi.org/10.1086/260807Bhagwati, J. N. (1978). Foreign trade regimes and economic development; Anatomy and consequences of exchange control regimes, NBER Books, National Bureau of Economic Research, Inc, number bhag78-1.
Socialis Series in Social Science68Blalock, G., & Gertler, P. J. (2009). How firm capabilities affect who benefits from foreign technology. Journal of Development Economics, 90(2), 192-199. https://doi.org/10.1016/j.jdeveco.2008.11.011Blomstrom, M., & Kokko, A. (1996). The Impact of Foreign Investment on Host Countries: A Review of the Empirical Evidence. World Bank Policy Research Working Paper, 1745, 44-44. Blomstrom, M., & Kokko, A. (2002). FDI and Human Capital: A Research Agenda. https://doi.org/10.1787/658557635021Blomström, M., & Kokko, A. J. J. o. E. S. (1998). Multinational Corporations and Spillovers. 12(3),247-277. https://doi.org/10.1111/1467-6419.00056Borensztein, E., De Gregorio, J., & Lee, J. W. (1998). How does foreign direct investment affect economic growth.Journal of International Economics, 45(1), 115-135.Guo, B., & Wang, B. (2014). Government Debt and Economic Growth: An Analysis of Threshold Effect Based on Return on Capital. The Journal of World Economy, 37(09), 95-118. Buckley, P. J., & Meng, C. (2005). The Strategy of foreign-invested manufacturing enterprises in China: Export-orientated and market-orientated FDI revisited.Journal of Chinese Economic and Business Studies, 3(2), 111-131. https://doi.org/10.1080/14765280500120112Caves, R. E. (1974). Multinational Firms, Competition, and Productivity in Host-Country Markets. Economica, 41(162), 176-193. https://doi.org/10.2307/2553765Chen, E. K. Y. (1983). Multinational corporations, technology,and employment / Edward K.Y. Chen. London: Macmillan.https://doi.org/10.1007/978-1-349-06106-8Cochrane, J. H. (2011). Presidential Address: Discount Rates. The Journal of Finance, 66(4), 1047-1108. https://doi.org/10.1111/j.1540-6261.2011.01671.xCzinkota, M. R., Moffett, M. H., & Ronkainen, I. A. (1994). International business (3d ed. ed.): Dryden.De Mello, L. R. (1997). Foreign direct investment in developing countries and growth: A selective survey. The Journal of Development Studies, 34(1), 1-34. https://doi.org/10.1080/00220389708422501Dunning, J. H., & Lundan, S. M. (2008). Institutions and the OLI paradigm of the multinational enterprise. Asia Pacific Journal of Management, 25(4), 573-593. https://doi.org/10.1007/s10490-007-9074-z
Socialis Series in Social Science69Fosfuri, A., Motta, M., & Rønde, T. (2001). Foreign direct investment and spillovers through workers’ mobility. Journal of International Economics, 53(1), 205-222. https://doi.org/10.1016/S0022-1996(00)00069-6Hu, R. W. (2017). China’s ‘One Belt One Road’ Strategy: Opportunity or Challenge for India? China Report, 53(2), 107-124. https://doi.org/10.1177/0009445517696619Katz, J. M. (1987). Technology Generation in Latin American Manufacturing Industries: Palgrave Macmillan UK.https://doi.org/10.1007/978-1-349-07210-1Keller, W., & Yeaple, S. (2003). Multinational Enterprises,International Trade, and Productivity Growth: Firm-Level Evidence from the United States. https://doi.org/10.3386/w9504Kohpaiboon, A. (2006). Foreign direct investment and technology spillover: A cross-industry analysis of Thai manufacturing. World Development, 34(3), 541-556. https://doi.org/10.1016/j.worlddev.2005.08.006Kokko, A. (1992). Foreign direct investment, host country characteristics, and spillovers / Ari Kokko. Stockholm: School of Economics, Economic Research Institute.Kokko, A. (1994). Technology, market characteristics, and spillovers. Journal of Development Economics, 43(2), 279-293. https://doi.org/10.1016/0304-3878(94)90008-6Kumar, M. S., & Baldacci, E. (2010). Fiscal Deficits, Public Debt, and Sovereign Bond Yields. https://doi.org/10.5089/9781455202188.001Meyer, K. E., & Sinani, E. (2009). When and Where Does Foreign Direct Investment Generate Positive Spillovers? A Meta-Analysis. Journal of International Business Studies, 40(7), 1075-1094. https://doi.org/10.1057/jibs.2008.111Moran, T. H. (2002). Beyond Sweatshops Foreign Direct Investment and Globalization in Developing Countries: Brookings Institution Press.Perez, T. (1997). Multinational enterprises and technological spillovers: An evolutionary model. Journal of Evolutionary Economics, 7(2), 169-192. https://doi.org/10.1007/s001910050040Ran, T., Fubing, S., Mingxing, L., & Guangzhong, C. (2010). Land Leasing and Local Public Finance in China’s Regional Development: Evidence from Prefecture-level Cities. Urban Studies, 47(10), 2217-2236. https://doi.org/10.1177/0042098009357961Smarzynska Javorcik, B. (2004). Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages. American Economic Review, 94(3), 605-627. https://doi.org/10.1257/0002828041464605
Socialis Series in Social Science70Vu, T. B. (2008). Foreign direct investment and endogenous growth in Vietnam. Applied Economics, 40(9), 1165-1173. https://doi.org/10.1080/00036840600749433Wang, J.-Y., & Blomström, M. (1992). Foreign investment and technology transfer: A simple model. European Economic Review, 36(1), 137-155. https://doi.org/10.1016/0014-2921(92)90021-NWong, J., & Lye, L. F. (2014). Reviving the Ancient Silk Road: China's New Diplomatic Initiative. East Asian Policy, 06(03), 5-15. https://doi.org/10.1142/S1793930514000221Yokota, K., & Tomohara, A. (2010). Modeling FDI-Induced Technology Spillovers. The International Trade Journal, 24(1), 5-34. https://doi.org/10.1080/08853900903442897
