Spatial correlation effect of China's outward foreign direct investment in countries along the One Belt and One Road

Abstract

AbstractPromoted by both the “going out” policy and the “One Belt and One Road” (OBOR) Initiative, China's outward foreign direct investment (OFDI) has grown rapidly in the past two decades. A spatial network has gradually formed that facilitates global production, sales, and innovation. This paper studies the spatial correlation of China's OFDI network along the OBOR and its determinants. The block model analysis suggests that China's OFDI spatial network comprises four gradient sections. In addition, the analyses of quadratic assignment procedure and exponential random graph models demonstrate a tendency of agglomeration of China's OFDI, which may hinder the further development of its spatial correlation networks. Finally, we present some policy suggestions stemming from the study in the hope of helping both the government and firms to optimize their OFDI spatial layout strategy along the OBOR.