scholarly journals Institutional Risk Preference and Asymmetric Role of Institutional Distance: An Examination on the OFDI of China

2021 ◽  
Vol 2021 ◽  
pp. 1-12
Author(s):  
Yawei Qi ◽  
Guangping Rao
Keyword(s):  
Multinational Enterprises ◽  
Negative Impact ◽  
Cultural Distance ◽  
Risk Preference ◽  
Institutional Distance ◽  
Asymmetric Effect ◽  
Institutional Risk ◽  
Belt And Road ◽  
The Impact ◽  
The Belt And Road

With the implementation of the “Going Out” policy and the “Belt and Road” initiative, Chinese outward foreign direct investment (OFDI) in the countries along the “Belt and Road” increased substantially in the past decade. This paper analyzes the impact of institutional distance on Chinese OFDI and whether Chinese OFDI exhibits institutional risk preferences, using data on Chinese OFDI in 41 countries along the “Belt and Road” for the period from 2003 to 2018. We find that political institutional distance and economic institutional distance are both positively related to China’s OFDI scale, while cultural distance has a negative impact on the investment scale. We also find that institutional distance has an asymmetric effect on China’s OFDI. In particular, the worse the host country’s political environment, the larger the Chinese OFDI, indicating that Chinese OFDI exhibits the political institutional risk preference. On the other hand, Chinese multinational enterprises are more willing to invest in host countries with high economic freedom. Culture institution environment of the host country has a positive but insignificant impact on the Chinese OFDI scale, indicating that Chinese OFDI shows the characteristics of cultural distance proximity.

scholarly journals How Do Cultural and Institutional Distance Affect China’s OFDI towards the OBOR Countries?

2017 ◽  
Vol 7 (1) ◽  
pp. 24-42 ◽  
Author(s):  
Lin Zhang ◽  
Zheqian Xu
Keyword(s):  
Direct Investment ◽  
Bilateral Trade ◽  
Cultural Distance ◽  
Institutional Distance ◽  
Outward Foreign Direct Investment ◽  
One Belt One Road ◽  
Belt And Road ◽  
The One ◽  
The Impact ◽  
The Belt And Road

Abstract In order to examine the impact of cultural and institutional distance on China’s OFDI towards the One Belt, One Road (OBOR) area, the paper selects 28 countries along The Belt and Road. The empirical results using panel data from 2006-2014 indicate that institutional distance is negatively correlated with China’s outward foreign direct investment (OFDI). At the same time, cultural distance interacts with bilateral trade, resulting in a “benefit of foreignness” effect.

The impact of institutional distance on sustainable investment: evidence from China’s Belt and Road Initiative

2020 ◽  
Vol 11 (4) ◽  
pp. 485-505
Author(s):  
Heshan Sameera Kankanam Pathiranage ◽  
Huilin Xiao ◽  
Weifeng Li
Keyword(s):  
Sustainable Development ◽  
Cultural Distance ◽  
Emerging Market ◽  
Institutional Distance ◽  
Foreign Direct Investments ◽  
Belt And Road Initiative ◽  
Content Type ◽  
Belt And Road ◽  
The Impact ◽  
The Belt And Road

Purpose In an attempt to satisfy the desire to become a global economic leader, China is working on a series of ambitious deals with several countries. As a major country in a region considered as an emerging market, the immense infrastructure gap that is curtailing trade and accessibility for economic growth has led to major changes in economic policy. The past few decades have seen China invest billions of dollars not only in the developing countries of Africa and Asia but also in other world economic giants of Europe and the USA. China has embarked on a rigorous global effort to close the infrastructure gap through the Belt and Road Initiative (BRI) in partnership with multilateral development banks. China’s BRI brings together several countries in East Asia and the Eurasian mainland into close proximity with China, thereby promoting inland trade between the countries. The investments in this project are estimated to reach US$1tn over a span of ten years. However, the volume of outward foreign direct investments (OFDI) from China to the host countries is determined by several factors. Several previous researchers have studied various issues affecting the business activities of China and the given countries. First, the cultural organization, policy approaches and objectives of China as a country create trade barriers with countries involved in the BRI plan. This paper aims to provide a comparative overview of how the institutional distance of the Belt and Road countries from China affects their sustainable development. Design/methodology/approach Data on the nature, success and challenges of the BRI (such as the volume of bilateral trade and OFDIs and its financial implications) were extracted from various published studies. The impact of cultural distance and internationalization of the BRI enterprise was analyzed through a comparative research methodology. Findings A significant relationship exists between institutional distance and sustainable development of the Belt and Road countries. However, the barriers – for example, inhospitable culture and regulations for organizations in participating countries – could become pillars of success once resolved. Originality/value Previous studies lacked a standard framework to investigate how institutional distance is related to China’s outbound trade with the Belt and Road countries. The comparative analysis methodology adopted in this study fills this gap.

scholarly journals The Effect of Geo political risk on China’s OFDI: A Research Based on Countries along the line of The Belt and Road Initiative

2019 ◽  
Vol 6 (12) ◽  
pp. 84-93
Author(s):  
Liu Ying
Keyword(s):  
Negative Impact ◽  
Risk Index ◽  
Self Awareness ◽  
Outward Fdi ◽  
Western Asia ◽  
Resource Endowment ◽  
Belt And Road ◽  
The One ◽  
The Impact ◽  
The Belt And Road

China's overall investment in ASEAN, Western Asia and Central Asia has been relatively large since the "one belt and one way" initiative, while the countries in Central and Eastern Europe and South Asia are less. Geopolitical economic risk is an important factor. In this paper, we use the inventory data of China's direct investment in the "one belt and one road" country for 2005-2013 years, the geopolitical risk index calculated by each sub index score of geopolitical risk released in ICRG, and the data of the system's scoring system of the world bank's development index database issued annually. Component analysis and fixed effect stepwise regression model are used to explore the impact of geopolitical risk on China's OFDI along the "one belt and one road" area. The results show that geopolitical risk has a direct negative effect on outward FDI, that is, China tends to invest in countries (regions) with higher geopolitical risk, which may be caused by foreign policy and resource endowment; further analysis found that factors of exchange rate index, per capita GDP, resource endowment, infrastructure, economic and legal freedom positively promote OFDI, while R&D expenditure has a negative impact on OFDI, which may be due to R&D delay. Therefore, we need to stabilize the political and economic relations among the countries along the belt and road, increase the transparency of investment information of the host country, and strengthen the enterprise's self-awareness.

scholarly journals Impact of Multi-Dimensional and Dynamic Distance on China’s Exports of Wooden Forest Products to Countries along the “Belt and Road”

2020 ◽  
Vol 12 (8) ◽  
pp. 3339
Author(s):  
Tianbo Wu ◽  
Bin Zhang ◽  
Yukun Cao ◽  
Pingjun Sun
Keyword(s):  
Gravity Model ◽  
Cultural Distance ◽  
Forest Products ◽  
Spatial Distance ◽  
Estimation Model ◽  
Key Factor ◽  
Belt And Road ◽  
Trade Gravity Model ◽  
The Impact ◽  
The Belt And Road

National distance (ND) is the key factor that affects international trade but the traditional trade gravity model only considers spatial distance, which is not enough. This paper therefore constructs a trade gravity model and a Generalized Moment Estimation Model (GMM) based on four dimensions—spatial distance (SD), economic distance (ED), institutional distance (ID) and cultural distance (CD)—comprehensively analyzing the impact of the heterogeneity represented by national distance on exports of wooden forest products (EWFP) from China to countries along the “Belt and Road” using panel data from 2001 to2018. The results show that the impacts of the four types of ND on China’s EWFP are different and that a major change has taken place since the “Belt and Road” initiative was proposed, within which CD has become the key factor that hinders exports, while the traditional SD is not significant. Therefore, using NDs instead of the SD of the traditional trade gravity model is much more reasonable. Finally, this paper proposes some suggestions to reduce the ND between China and the route countries and to promote cooperation among them.

scholarly journals Impact of Transport Infrastructure on Gross Regional Products: Evidence from Chinese Provinces under the “Belt and Road Initiative”

2020 ◽  
Vol 2 (2) ◽  
pp. 23-45
Author(s):  
Jin-Hui Li ◽  
Chol-Ju An ◽  
Gwang-Nam Rim
Keyword(s):  
Economic Growth ◽  
Economic Benefits ◽  
Transport Infrastructure ◽  
Belt And Road Initiative ◽  
Regression Analyses ◽  
Belt And Road ◽  
Development Levels ◽  
The Impact ◽  
The Belt And Road

Purpose: This paper analyzes the impact of transport infrastructure on Gross Regional Products in Chinese provinces under the “Belt and Road Initiative”. Methods: The impact of the key elements of transport infrastructure on Gross Regional Products is analyzed based on the data related to development levels of transport infrastructure and economic development. Correlation and regression analyses were used for data analysis. Results: It is found that railways and highways, which are the key elements of transport infrastructure, have a strong correlation with Gross Regional Products, and their effects are diverse among provinces under study. Implications: The findings demonstrate the position and role of diverse infrastructural elements in enhancing the economic benefits of infrastructural investment and promoting economic growth. Thus, it is expected to facilitate decision-making related to infrastructural investment under the “Belt and Road Initiative”.

scholarly journals Has “the Belt and Road initiative” Improved the Pollution Level?

2021 ◽  
Vol 275 ◽  
pp. 02023
Author(s):  
Jing Zheng
Keyword(s):  
Panel Data ◽  
Technological Innovation ◽  
Foreign Investment ◽  
Industrial Structure ◽  
Pollution Level ◽  
Belt And Road Initiative ◽  
Waste Gas ◽  
Belt And Road ◽  
The Impact ◽  
The Belt And Road

Based on the panel data of 278 prefecture-level cities in China from 2008 to 2018, this paper adopts DID method to verify the impact of “the Belt and Road initiative” on pollution level of these cities, the results are still robust through the placebo test and PSM-DID, the mechanism is also analyzed. The study found that “the Belt and Road initiative” has a significant effect on the emission of wastewater, waste gas and dust of cities in China; the mechanism test shows that “the Belt and Road initiative” has significantly reduced urban environmental pollution by promoting foreign investment, upgrading industrial structure and technological innovation.

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