Abstract
Based on the driven mode and the form of labor division, the two paths that affect the evolution of the host country’s manufacturing industry GVC, this paper constructs a mechanism on their impacts on China’s OFDI location strategy, and then verifies the theoretical hypotheses by taking China’s OFDI stock across 26 EU member states and 13 manufacturing sub-industries during 2003 to 2014 as the sample. The empirical results obtained by comprehensive Generalized Least Squares (GLS) estimation show that, from the perspective of the GVC driven model, the high-tech level, rich human capital under the producer-driven model, and huge market potential based on buyer-driven mode are important factors affecting China’s OFDI location choice across EU member states. From the perspective of GVC labor division, the higher vertical specialization and host country’s GVC status of manufacturing sub-industry attract the inflow of Chinese investments.
Highlights
The empirical results obtained by comprehensive Generalized Least Squares (GLS) estimation show that, from the perspective of the Global Value Chain (GVC) driven model, the high-tech level, rich human capital under the producer-driven model, and huge market potential based on buyer-driven mode are important factors affecting China’s Outward Foreign Direct Investment (OFDI) location choice across EU member states
With the deepening of the globalization of production, the international labor division based on the Global Value Chain (GVC) has become the main form for enterprises from various countries to participate in international competition
When the host country gathers a large number of professional talents, it can generate technology spillover effect through the “Human Capital Pool”, and at the same time, it can provide labor supply for Chinese affiliates motivated by strategic asset seeking
Summary
With the deepening of the globalization of production, the international labor division based on the Global Value Chain (GVC) has become the main form for enterprises from various countries to participate in international competition. According to statistics from the United Nations Conference on Trade and Development (UNCTAD, 2013), GVC dominated by multinational enterprises (MNEs) accounts for 80% of international trade, and MNEs’ main business ac-. The trend of cross-border capital flows led by MNEs and the evolution of GVC complement each other
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