DOES THE BELT AND ROAD INITIATIVE RESHAPE CHINA’S OUTWARD FOREIGN DIRECT INVESTMENT IN ASEAN? SHIFTING MOTIVES OF STATE-OWNED AND PRIVATE-OWNED ENTERPRISES

Shi Jin, Hu Xiaohui, Li Yunxiong and Feng Tao
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Shi Jin: School of Economics, Zhejiang University of Technology, China
Hu Xiaohui: #x2020;School of Public Administration, Zhejiang University of Finance and Economics, China
Li Yunxiong: #x2021;Department of Geography and Environment, London School of Economics and Political Science, United Kingdom
Feng Tao: #x2020;School of Public Administration, Zhejiang University of Finance and Economics, China

The Singapore Economic Review (SER), 2021, vol. 66, issue 01, 161-183

Abstract: In recent years, China has been increasingly witnessed as a major global outward investor, especially since the launch of the Belt and Road Initiative (BRI) in 2013. The question of whether and if yes how the BRI reshapes firm outward investment motives remains under-researched. Using a project-level database of China’s Outward Direct Investment from the Ministry of Commerce from 2010 to 2015, this paper investigates the changing investment motives of state-owned and private-owned enterprises (SOEs and POEs) before and after the implementation of the BRI in two periods, namely 2010–2013 and 2014–2015. Our conditional logit models show that (1) market-seeking is one of the key motives for both POEs and SOEs; (2) POEs pursued natural resources in ASEAN based on geographical and relational proximity in the pre-BRI period while SOEs are directed to exploit natural resources in ASEAN besides remoter destinations after the launch of the BRI; (3) POEs are risk-taking in both periods, which runs counter to conventional expectations. This can be explained by the long-term investment tradition of POEs in ASEAN in which POEs are attracted predominantly by socio-economic factors and often less sensitive to variegated host institutions among ASEAN countries and (4) the BRI promotes Chinese OFDI in ASEAN through increased senior leader visits and enhanced diplomatic relations.

Keywords: The Belt and Road Initiative; ASEAN; outward foreign direct investment (OFDI); firm ownership; motive change (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1142/S0217590819500772

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