What Drives Chinese ODI to the Countries of Belt and Road Initiative (BRI): An Empirical Analysis

Abstract

The purpose of this paper is to analyze the possible motivations of Chinese outward foreign direct investments (OFDI) into 33 developing countries along the Belt and Road Initiative (BRI). The framework of the study is built upon the location specific precepts of Dunning's eclectic paradigm. We attempt to find empirical evidence to some of the perceived or stated objectives of BRI, which have received little attention as determinant of FDI in extant literature. The study employs general linear regression model for estimation of results. We find support for our hypothesis that the Chinese IFDI is significant and positively associated with the proportion of Chinese imports and the endowments of natural resource in the host country. Contrary to the established view, this study finds a negative relationship between the quality of infrastructure in the host country and the Inward FDI from China in BRI countries. Our study brings fresh evidence to the ongoing debate about the determinants of Chinese ODI by adding a data driven analysis. It also presents new insights into to the relationship between the host country's macroeconomic indicators and inward FDI.