National distance and China’s OFDI: Research based on the ‘Belt and Road’ countries

Tian Zhao

Applied Economics Letters, 2021, vol. 28, issue 10, 835-839

Abstract: China’s outward foreign direct investment (OFDI) has made remarkable achievements under the ‘Belt and Road’ initiative. National distance has an important impact on China’s OFDI through the interaction of liability of foreignness (LOF) and advantages of foreignness (AOFs). After dividing the national distance into three aspects of geography, economy and humanity, its impact on China’s OFDI along the ‘Belt and Road’ is tested empirically. The results show that the influence of national distance on China’s OFDI is U-shaped. Before crossing the threshold, LOF plays a major role, and national distance shows a negative effect on OFDI. While after the specific threshold is surpassed, AOF will offset some adverse effect of LOF and contribute to the healthy development of China’s OFDI along the ‘Belt and Road’.

Date: 2021
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DOI: 10.1080/13504851.2020.1782334

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