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What drives China’s outward FDI? A regional analysis

Kefei You

No 16/2015, BOFIT Discussion Papers from Bank of Finland, Institute for Economies in Transition

Abstract: Our study examines home drivers of China’s regional outward FDI. We propose a theoretical framework that incorporates an extended Investment Development Path (IDP) theory, home locational constraints, policy incentives and geographic factors. Empirically, we employ the Bayesian Averaging Maximum Likelihood Estimates method to address model uncertainty. All proposed theories (except for geographic aspects) are found to provide important perspectives explaining China’s regional outward FDI. Our results highlight the importance of government policies but do not support the original IDP hypothesis that outward investment is automatically generated as income grows. Our findings have implications for both regional and central-government policy.

JEL-codes: F21 R11 C11 C23 (search for similar items in EconPapers)
Date: 2015-05-05
New Economics Papers: this item is included in nep-cna and nep-int
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Published in Published in The Journal of Developing Areas, Volume 51, Number 2, Spring 2017: 239-253

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