Innovation and OFDI along the Belt and Road

Yongmin Zhang, Zhenbang Zhang, Hanglin Jin, Wenjun Tu and Yingnan Liu

Technological Forecasting and Social Change, 2024, vol. 200, issue C

Abstract: Outward foreign direct investment (OFDI) has become an important strategy for enhancing firms' innovation capabilities through the reverse technology spillover effects from overseas innovation experience. The extant research on the effect of OFDI on innovation has focused primarily on developed economies, while the influence of OFDI in developing countries has remained relatively unexplored. The major Belt and Road Initiative (BRI) encourages Chinese firms to invest in Belt and Road (BR) countries—mainly developing nations. We investigate the impact of BR OFDI on Chinese firms' innovations and its influencing mechanisms. The main findings are as follows. First, BR OFDI has a positive effect on innovation by increasing R&D spending and returns on investments in overseas subsidiaries. Second, the number of research-driven subsidiaries has a positive moderating effect on innovation. Finally, the BR ODFI innovative effect is stronger after the launch of the BR initiative in 2013 and more significant for nonstate-owned enterprises. Our research has theoretical significance by uncovering the overseas return mechanism and the moderating effects of investment depth and motivation on the impact of BR OFDI on innovation—topics rarely explored in the OFDI literature. These research findings have practical implications for governments designing effective policies to promote BR OFDI activities and for firms developing robust OFDI investment strategies along the Belt and Road to improve their innovation performance.

Keywords: Innovations; OFDI; Belt and road (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:200:y:2024:i:c:s0040162523008211

DOI: 10.1016/j.techfore.2023.123136

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