Abstract
This paper explores the role of political environment (PE) and exchange rate (ER) movements in determining China’s outward foreign direct investment (OFDI) for a period of 2003–2015. It includes 65 countries along “OBOR” (One Belt One Road) to build up a panel data base. ER level, ER volatility and Political Environment are examined in relation to Chinese OFDI in these “OBOR” countries. The empirical results show that RMB appreciation is associated with higher Chinese OFDI flow but Chinese OFDI is not sensitive to ER volatility and PE instability. Considering the growing importance of the “OBOR” initiative, we believe that our research results shed light on the trend of Chinese OFDI.
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