Abstract
We empirically investigate the factors that drive China's outward FDI using dynamic
panel methods for 27 countries from 1995 to 2002. Based on the literature review
we test three hypotheses: comparative advantages in low wage countries, vertical
integration towards resource and human capital abundant countries, and the
transaction-enforcing FDI to complement exports. Our results provide strong
support for the transaction-enforcing motive: China’s FDI follows exports. Next,
only in the presence of exports, low income per capita is important arguably because low-income countries have a preference for Chinese low-cost exports. Finally, though this series we find no evidence of FDI to skill-abundant countries and no evidence that host market resources or governance matters.
panel methods for 27 countries from 1995 to 2002. Based on the literature review
we test three hypotheses: comparative advantages in low wage countries, vertical
integration towards resource and human capital abundant countries, and the
transaction-enforcing FDI to complement exports. Our results provide strong
support for the transaction-enforcing motive: China’s FDI follows exports. Next,
only in the presence of exports, low income per capita is important arguably because low-income countries have a preference for Chinese low-cost exports. Finally, though this series we find no evidence of FDI to skill-abundant countries and no evidence that host market resources or governance matters.
| Original language | English |
|---|---|
| Place of Publication | Utrecht |
| Publisher | UU USE Tjalling C. Koopmans Research Institute |
| Number of pages | 20 |
| Publication status | Published - Feb 2009 |
Publication series
| Name | Discussion Paper Series / Tjalling C. Koopmans Research Institute |
|---|---|
| No. | 02 |
| Volume | 09 |
| ISSN (Electronic) | 2666-8238 |
Keywords
- China
- transaction-enforcing FDI
- locational determinants