Does Chinese OFDI really promote export?

Chih-Fan Lin ()
Additional contact information
Chih-Fan Lin: Xiamen University

China Finance and Economic Review, 2016, vol. 4, issue 1, 1-16

Abstract: Abstract Background Most papers have come to positive conclusions regarding whether Chinese outward foreign direct investment really promote export. Methods This paper contributes by correcting model misspecification, wrong variable selection and estimation methods which are prevalent in existing studies and reexamine the relationship between outward foreign direct investment and export trade of China using panel data from 2003 to 2014. Results The regressions indicate that, on average, the point estimate of the elasticity between Chinese outward foreign direct investment and export trade is at most 0.073, and it is not statistically significant. Sub-sample regressions show that Chinese investment in developed economies slightly substitutes export while investment in developing economies complements export. But these effects disappear when country-specific effects are controlled. Year-by-year regressions show that the complementary effect of OFDI on export is on a steady rise. Conclusions Using correctly specified model with more appropriate variable selection and estimation methods and take into account the quantitative difference between OFDI and export, any “substitutionary” or “complementary” effect is indeed negligible.

Keywords: Outward foreign direct investment; Export; Complementation effect; Substitution effect (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://link.springer.com/10.1186/s40589-016-0037-8 Abstract (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:chfecr:v:4:y:2016:i:1:d:10.1186_s40589-016-0037-8

Ordering information: This journal article can be ordered from
http://www.springer. ... nomics/journal/40589

DOI: 10.1186/s40589-016-0037-8

Access Statistics for this article

China Finance and Economic Review is currently edited by Shunan Yu

More articles in China Finance and Economic Review from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().