Geo-politics and the impact of China's outward investment on developing countries: evidence from the Great Recession

Bastian Gawellek, Jingjing Lyu and Bernd Süssmuth

Emerging Markets Review, 2021, vol. 48, issue C

Abstract: Using a novel dataset on Chinese large-scale overseas investment and project contracts by sector and mode of entry, we analyze whether Chinese outward activity (COA) before the Great Recession worsened or alleviated the contractionary phases in developing countries. We find that, on average, COA did not increase recessionary vulnerability. Both sectoral targeting and the size of pre-crisis engagement matter. While COA in financial market sectors implies an aggravation, substantial pre-crisis investment in energy, metals and transportation industries tends to attenuate the slump. Additionally, the mode of entry, i.e. through either greenfield investment or mergers and acquisitions, also matters.

Keywords: Global crisis; Offshoring; Developing countries; Sectoral transmission (search for similar items in EconPapers)
JEL-codes: F20 F30 F40 F63 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:48:y:2021:i:c:s1566014121000236

DOI: 10.1016/j.ememar.2021.100815

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