Impacts of home country's institutional environment on OFDI dual margin

Abstract

This study uses SDM model, SLM model and SEM model to investigate the impacts of the institutional environment of the home country on OFDI dual margin. The study reveals that there is a spatial spillover effect of the institutional environment on the dual margin. Then, The institutional environment is divided into economic environment, political environment and legal environment. The degree of financial support, legalization and corruption all have significant influence on the dual margin, but the impacts on the margin of expansion and the margin of intensification are discrepant. Furthermore, in order to analyze the regional heterogeneity of the impact of institutional environment factors on dual margin, China is divided into three regions, namely east, middle and west for sub-sample study. The study found that the impact of institutional environment does exist regional differences and spatial spillovers. Our results remain unchanged after robustness checks.