Abstract

How the foreign direct investment behavior of enterprises changes in response to the risks and instability of government economic policy changes is a relevant issue which, however, has not been extensively studied yet. Accordingly, this paper establishes a linear probability regression model to study the foreign direct investment behavior of Chinese A-share listed companies in 13 countries between 2003 and 2020 and explores whether multinational companies change their OFDI decisions when the economic policy environment of China and trade-related countries are unstable. A firm heterogeneity analysis and phased discussions were conducted, and a robust conclusion was finally drawn. The results show that (1) China's economic policy uncertainty promotes China's foreign direct investment, while the host country's monetary policy uncertainty inhibits China's foreign direct investment. (2) The foreign direct investment decisions of enterprises are affected not only by the macroeconomic and policy environment of the two trading countries but also by their development characteristics. (3) Sino-US trade frictions and the financial crisis have different effects on China's foreign direct investment.

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call

Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.