The Determinants of Chinese Outward Foreign Direct Investment: A Closer Look

Muhammad Zubair Mumtaz () and Zachary Alexander Smith
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Muhammad Zubair Mumtaz: School of Social Sciences & Humanities, National University of Sciences & Technology, H-12, Islamabad, Pakistan
Zachary Alexander Smith: Department of Economics, Saint Leo University, Saint Leo, FL 33574, USA

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2018, vol. 13, issue 4, 577-601

Abstract: Over the last fifteen years, China rapidly expanded its outward foreign direct investment (OFDI) through remarkable economic growth and the ¡°go global¡± policy. Chinese firms explored investment avenues especially in developing and emerging countries. As a result, China became the third largest contributor of OFDI. We examine the determinants of Chinese OFDI in 67 countries during the period lasting from 2006 to 2015 using the feasible generalized least square method. We find that the size of the economy, market opportunities, cost advantages due to low wage structure, ease of doing business, country risk, and geographical proximity are the prominent factors leading to changes in Chinese OFDI in developing and emerging economies. We find that China¡¯s investments in different developing and emerging countries are driven by a different set of factors and the determinants of Chinese OFDI vary in low and high per capita income countries.

Keywords: China; outward foreign direct investment (OFDI); emerging and developing countries; globalization (search for similar items in EconPapers)
JEL-codes: F21 F23 O57 (search for similar items in EconPapers)
Date: 2018
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