Impact of China's outward foreign direct investment on the Belt and Road Initiative countries' digital economy and energy transition

Evaluating the impact and heterogeneity of China's OFDI on total-factor carbon emission performance in Belt and Road Initiative countries

The effect of China’s outward foreign direct investment on carbon intensity of Belt and Road Initiative countries: A double-edged sword

Economic vulnerability is an important indicator to measure regional coordination, health and stability. Despite the importance of vulnerabilities, this is the first study that presents 26 indicators selected from the dimensions of the domestic economic system, external economic system and financial system in the Belt and Road Initiative (BRI) countries. A quantitative analysis is conducted to analyze the characteristics of spatial heterogeneity of vulnerability of the economic subsystems and the comprehensive economic system of the BRI countries and the main influencing factors of the comprehensive economic system vulnerability (CESV) are identified based on obstacle degree model. The results show that the CESV of the East Asia, South Asia and ASEAN countries are lower than that of the Middle Eastern Europe, Central Asia and West Asia countries. The CESV of the BRI countries are generally in the middle level and the average vulnerability index of highly vulnerable countries is twice as much as that of lowly vulnerable countries. In addition, in terms of the vulnerability of the three subsystems, the spatial distribution of vulnerability of the domestic economic system (DESV) and financial system (FSV) is basically consistent with the spatial distribution pattern of CESV, both of which are low in East Asia and South Asia and high in West Asia and Central Asia. While, the vulnerability of external economic system (EESV) shows a different spatial pattern, with vulnerability of West Asia, Central Asia and ASEAN higher than that of East Asia and South Asia. The main obstacle factors influencing the CESV of BRI countries include GDP growth rate, saving ratio, ratio of bank capital to assets, service industry level, industrialization level and loan rate. Therefore, the key way to maintain the stability and mitigate the vulnerability of the economic system of BRI countries is to focus on the macroeconomic development and operation, stimulate the economy and market vitality, promote the development of industries, especially the service and secondary industries, and optimize the economic structure, banking system and financial system.

Belt and Road Initiative (BRI) countries are major energy producers and consumers in the world, and they have enormous potential for energy cooperation, energy saving, and CO2 emissions reduction due to their various resource endowments. However, little quantitative research has been conducted under the BRI in the same framework. Therefore, by developing a data envelopment analysis optimisation model combined with the window analysis method, this paper investigates the energy performance of BRI countries for the period from 1995 to 2015, and evaluate the potential of energy saving and CO2 emissions reduction for each BRI country. The results show that, first, the average energy performance of 56 BRI countries is about 0.69, with evident difference across regions and countries. Specifically, in Sub-Saharan Africa and Europe and Central Asia, energy performance is relatively lower, and their averages are 0.59 and 0.60, respectively; in particular, Ukraine has the lowest energy performance among the 56 BRI countries (0.24); while the energy performance in Middle East and North Africa and South Asia appears relatively higher (0.80 and 0.89, respectively). Second, these 56 BRI countries have great energy saving potential, about 9.95 billion metric tonnes of oil equivalent from 1995 to 2015. Among them, Europe and Central Asia, East Asia and Pacific, and Middle East and North Africa make relatively larger contribution. Finally, these 56 BRI countries may produce potential CO2 emissions reduction of 50.87 billion metric tonnes during the study period, and Europe and Central Asia and East Asia and Pacific contribute the most (45.18% and 25.53%, respectively).

ABSTRACTUsing feasible generalized least squares (FGLS) and ordinary least square (OLS) estimations on a dataset of 1208 outward Foreign Direct Investment (OFDI) events by Chinese-listed firms from 2004 to 2015, this paper investigated the impact of OFDI on the performance of Chinese firms, from which it was found that Chinese firms that had invested in Belt and Road Initiative (BRI) countries were more productive than those that had invested in non-BRI countries. However, OFDI by both state-owned enterprises (SOE) and non-SOE were on average found to be negatively related to productivity and profitability, with state-owned enterprises (SOEs) having worse performance in terms of total factor productivity (TFP) than non-SOEs. A further subsample analysis found that Chinese firms that were investing in developing economies were performing better than those that had invested in developed ones; firms investing in sub-regions like Middle East and South Africa, East Asia and the Pacific, Latin America and the Caribbean experienced a positive post-OFDI TFP but investment in other regions had either insignificant or negatively significant coefficients, indicating that firms in general had poor post-OFDI performances. The findings in this paper are informative for developing going-global strategies for both firms and government authorities.

Club convergence in energy efficiency of Belt and Road Initiative countries: The role of China’s outward foreign direct investment

This study uses country-level panel data covering 64 countries in the Belt and Road Initiative (BRI) for the period 2003–2015 and employs a dynamic panel system generalized method of moments (GMM) model with instrumental variable regression techniques to investigate empirically the impact of China’s outward foreign direct investment (OFDI) on trade intensity with BRI countries. The study finds that China’s OFDI on average has a positive impact on import intensity and a negative impact on export intensity with BRI countries. However, the impact of China’s OFDI on its trade intensity with BRI countries varies by country groups of resource-rich, high-income, and low-income countries in different periods. The regression results for different periods show that since the BRI was launched in 2013, China’s OFDI has strengthened bidirectional trade relations between China and BRI countries.

Energy consumption, pollution haven hypothesis, and Environmental Kuznets Curve: Examining the environment–economy link in belt and road initiative countries

This study analyses Chinese enterprises’ outward foreign direct investment (OFDI) from the perspectives of the Belt and Road Initiative (BRI) and home-country enterprise heterogeneity. It analyses the roles of BRI and the Asian Infrastructure Investment Bank (AIIB) in China’s OFDI using enterprise-level data for 2008–2017 from China Global Investment Tracker on Chinese enterprises’ OFDI in 128 countries. The results show that the roles of the BRI or AIIB in Chinese enterprises’ OFDI varies based on the ownership system of home country enterprises. BRI significantly affected the OFDI of central state-owned enterprises (SOEs) representing the national strategy, but not that of private enterprises. Interestingly, BRI implementation did not promote local SOEs’ OFDI significantly. Since local SOEs drive the local economy and obtain profits, they act similarly to private enterprises in investment selection.

Innovation and OFDI along the Belt and Road

The Belt and Road Initiative (BRI) countries are mainly developing countries with severe energy poverty. This study combines the entropy weight and the Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) method to measure energy poverty at the household, enterprise, and national levels in 82 BRI countries. This study aims to investigate and discuss how to encourage BRI countries to develop effective decision-making mechanisms for developing more targeted supply-side solutions to domestic energy poverty. A geographic information system (GIS) is also used to construct spatial distribution maps to assess energy poverty. The findings show that countries in South Asia, Southeast Asia, and North Africa have the highest levels of energy poverty, while countries in West Asia and Europe have the lowest. East Timor, Tonga, and Equatorial Guinea are of the most extremely lowest. The assessment methodology used in this paper focuses not only on the energy poverty faced by households, but also on the overall energy supply and service situation at the enterprise and national levels. These perspectives are likely to influence policy making and help the governments in addressing domestic energy poverty more effectively from the supply side.

Estimating the environmental efficiency, productivity, and shadow price of carbon dioxide emissions for the Belt and Road Initiative countries

The Belt and Road Initiative (BRI) is an important strategy for China. This study examines the effect of political involvement on firms' outward foreign direct investment (OFDI) in belt‐road countries after the BRI. Using merged Chinese nonfinancial listed firm data, the fDi Markets database, and the Thomson One database (formerly known as SDC Platinum) for the period 2008–2018, we find that political involvement has positive effect on firms' OFDI in belt‐road countries after the BRI. Furthermore, we find that the positive effect is heterogeneous across state‐owned enterprises (SOEs) and non‐SOEs. Political involvement has a positive effect on M&A for SOEs and Greenfield investment for non‐SOEs in belt‐road countries after the BRI. Our findings suggest that political involvement promotes firms' OFDI in belt‐road countries after the BRI and is helpful to the macro‐policy implementation.

Purpose The purpose of this paper is to investigate how digital economy development in the Association of Southeast Asian Nations (ASEAN) affects China’s outward foreign direct investment (OFDI) and the underlying mechanisms. Design/methodology/approach Based on panel data from ASEAN member countries from 2013 to 2021, we set China’s OFDI stocks as the dependent variable, the Global Digital Economy Development Index (TIMG) as the independent variable, and technological innovation, human capital and institutional quality as mediating variables, and conduct empirical analyses. Findings The results show that digital economy development in ASEAN countries, including the advancement of digital technology, the improvement of digital infrastructure, the expansion of digital market scale, and the enhancement of the digital governance capacity, can significantly promote China’s OFDI in these countries. Furthermore, China’s OFDI is more likely to flow into ASEAN countries with lower economic development levels, and technological innovation, human capital, and institutional quality mediate the relationship between digital economy development and OFDI. Originality/value In theory, by incorporating the digital economy into the analytical framework of the factors influencing OFDI, this study expands both the traditional set of economic and geographical elements and the theoretical boundaries of international investment location decisions. In practice, we empirically examine the causal relationship between the digital economy and China’s OFDI decisions and the underlying mechanisms to provide valuable insights that will enhance China’s high-quality OFDI and its economic and trade exchanges with ASEAN countries while promoting the sustainable development of the regional digital economy.

PurposeThis study aims to explore the effect of the home country institutional environment on firms’ outward foreign direct investment (OFDI) and how it is affected by institutional environment differences across home country subregions. Drawing on transaction cost theory, this paper examined the relationship between the Belt and Road Initiative (BRI) and Chinese firms’ OFDI, as well as the moderating roles of local government officials’ career horizons and state ownership.Design/methodology/approachA sample of 5,018 Chinese firm-year observations with foreign investment activities was used over 11 years to estimate a panel-feasible generalized least square regression model.FindingsThe results show that the BRI improves Chinese firms’ OFDI in countries along the BRI route. Furthermore, this positive relationship is weaker for firms where provincial officials have longer career horizons and is stronger for state-owned enterprises (SOEs) compared to non-SOEs.Originality/valueThe findings confirm the positive effect of home country institutional environment on firms’ OFDI. Furthermore, the multiple government perspective offers new insight into the effects of the home country’s institutional environment on OFDI.