Abstract
China’s rising outbound foreign direct investment (ODI) has raised concerns as to whether it substitutes or complements domestic investment (DI). We demonstrated specification weaknesses in the previous studies and present fresh evidence on ODI–DI nexus for China. Utilizing ARDL approach for time series macroeconomic data, the study detects long-run negative one-way causality running from ODI to DI. The results provide robust evidence supporting the view that Chinese outbound foreign direct investment crowds out DI in the long run.
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