The Role of Government Policies in Promoting Outward Foreign Direct Investment from Emerging Markets: China’s Experience

Abstract

What role do government policies play in the process of enterprises’ outward foreign direct investment (OFDI), especially enterprises from emerging markets? As emerging market OFDI retains the momentum of stable and rapid development, more and more scholars (Deng 2004; Peng, Wang and Jiang 2007; Witt and Lewin 2007; Yamakawa, Peng, and Deeds 2008) are paying attention to the institutional factors, in addition to the strategic motivations (Luo 2007) that drive enterprises abroad. However, the main thrust of this scholarly research is to assess the normative and cognitive pillars (Scott 1995, 33) of institutions; few studies explicitly focus on the role of OFDI regula-tion. We proceed, instead, with a pragmatic elaboration of the important role of governmental policies of encouragement, illustrated by several examples from China, relevant to the international business (IB) field.