Does the Aging of the Chinese Population Have an Impact on Outward Foreign Direct Investment?

Luman Zhao, Yabin Zhang and Yuefeng Xie ()
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Luman Zhao: School of Economics and Trade, Hunan University, Changsha 410006, China
Yabin Zhang: School of Economics and Trade, Hunan University, Changsha 410006, China
Yuefeng Xie: School of Economics and Trade, Hunan University, Changsha 410006, China

Sustainability, 2023, vol. 15, issue 18, 1-24

Abstract: Given the progression of population aging in China, does the diminishing demographic dividend boost the promotion of investment abroad in the form of outward foreign direct investment (OFDI)? This empirical study focused on the influence of population aging on outward foreign direct investment (OFDI) decisions and its underlying mechanisms. The research found that population aging has a significant positive effect on the level of OFDI. This effect is particularly pronounced in the eastern and central regions, while not statistically significant in the western region. Furthermore, population aging has a significant impact on the factor cost effect and the technological progress effect. The former is characterized by increased labor costs, while the latter is associated with technological advancements. The study confirmed that population aging positively influences OFDI changes through these two mechanisms. The empirical results hold statistically significant after multiple robustness checks. This study holds a significant reference value in advancing the facilitation of high-level opening-up polices and policy coordination to effectively address the challenges posed by population aging.

Keywords: population ageing; outward foreign direct investment; labor cost effect; technological progress effect (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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