Impact Of Outward Direct Investment Research Articles

The Spatial Spillover Effect of OFDI on Energy Efficiency

The article uses the spatial Durbin model to examine the spatial spillover effect and mechanism of outward foreign direct investment (OFDI) on China’s green total factor energy efficiency. The study found that, from an overall perspective, outward direct investment negatively impacts local green total factor energy efficiency and has a negative spatial spillover effect on green total factor energy efficiency in geographically related regions. From a regional perspective, the impact of outward direct investment on regional green total factor energy efficiency shows significant regional heterogeneity. In contrast, outward direct investment in the eastern region only promotes improving local green total factor energy efficiency. Mechanism analysis found that outward direct investment negatively impacts the region’s green total factor energy efficiency by inhibiting green technology innovation and industrial structure upgrading. These research conclusions can provide important references for other countries to optimize their foreign investment policies and achieve sustainable development.

Analysis on the Belt and Road Initiative and Outward Direct Investment

The Belt and Road initiative provides mutual opportunities for China and the countries along the line. This paper analyzed the structure, influencing factors and the impact of outward direct investment from China to the countries along the Belt and road initiative. The investment is unevenly distributed and inclines to countries with abundant strategic resource, lower labor cost and better infrastructure. Various macro level factors from both host countries and China influence the scale, scope and location choice of outward direct investment. Outward direct investment from China into countries along the Belt and Road initiative would have positive impact on China’s development in various aspects, such as positive trade effect, reverse technology spillovers, industrial transformation and upgrading, and internationalization of RMB. Investment policies should be established and perfected to facilitate investment.

Unpacking the Relationship between Outward Direct Investment and Innovation Performance: Evidence from Chinese firms

This study investigates the impact of outward direct investment (ODI) by Chinese MNEs on innovation performance and the conditions under which such an impact is moderated, based on a sample of Chinese firms. The empirical evidence suggests that undertaking ODI leads to an increase in the innovation performance of these Chinese firms. The impact of ODI on innovation is contingent on firm characteristics such as in-house R&D, strategic orientation and international experiences as well as contextual factors associated with investment destinations and industry contexts. We also find that learning through ODI is a complex process. There is a substitution between ODI and in-house R&D in Chinese MNEs. Our findings suggest that conducting ODI in developed countries serves as an effective channel for latecomer firms to overcome internal resource constraints and leapfrog towards the technology frontier.

International Reserves Before and After the Global Crisis: Is There No End to Hoarding?

We evaluate the impact of the global financial crisis (GFC) and recent structural changes in the patterns of hoarding international reserves (IR). We confirm that the determinants of IR hoarding evolve with developments in the global economy. During the pre-GFC period of 1999-2006, gross saving is associated with higher IR in developing and emerging markets. The negative impact of outward direct investment on IR accumulation is consistent with the recent trend of diverting international assets from the international reserve account into tangible foreign assets; the “Joneses’ effect” lends support to the regional rivalry in hoarding IR as a motivation; and commodity price volatility induces precautionary buffer hoarding. During the 2007-2009 GFC period, previously significant variables become insignificant or display the opposite effect, probably reflecting the frantic market conditions driven by financial instability. Nevertheless, the propensity to import and gross saving continue to display strong and even larger positive effects on IR holding. The results from the 2010-2012 post-GFC period are dominated by factors that had been mostly overlooked in earlier decades. While the negative effect of swap agreements and the positive effect of gross saving on IR holdings are in line with our expectations, we find a change in the link between outward direct investment and IR in the pre- and post-crisis period. The macro-prudential policy tends to complement IR accumulation. Developed countries display different demand behaviors for IRs. Our predictive exercise affirms that an emerging market economy with insufficient IR holdings in 2012 tends to experience exchange rate depreciation against the U.S. dollar when many emerging markets were adjusted to the news of tapering quantitative easing in 2013.

International reserves before and after the global crisis: Is there no end to hoarding?

We evaluate the impact of the global financial crisis (GFC) and recent structural changes in the patterns of hoarding international reserves (IR). We confirm that the determinants of IR hoarding evolve with developments in the global economy. During the pre-GFC period of 1999–2006, gross saving is associated with higher IR in developing and emerging markets. The negative impact of outward direct investment on IR accumulation is consistent with the recent trend of diverting international assets from the international reserve account into tangible foreign assets; the “Joneses' effect” lends support to the regional rivalry in hoarding IR as a motivation; and commodity price volatility induces precautionary buffer hoarding. During the 2007–2009 GFC period, previously significant variables become insignificant or display the opposite effect, probably reflecting the frantic market conditions driven by financial instability. Nevertheless, the propensity to import and gross saving continue to display strong and even larger positive effects on IR holding. The results from the 2010–2012 post-GFC period are dominated by factors that had been mostly overlooked in earlier decades. While the negative effect of swap agreements and the positive effect of gross saving on IR holdings are in line with our expectations, we find a change in the link between outward direct investment and IR in the pre- and post-crisis period. The macro-prudential policy tends to complement IR accumulation. Developed countries display different demand behaviors for IRs -- higher gross saving is associated with lower IR holding, possibly reflecting high-income countries' tendency to deploy their savings in the global capital markets. The presence of sovereign wealth funds motivates developed countries to hold a lower level of IR. Our predictive exercise affirms that an emerging market economy with insufficient IR holdings in 2012 tends to experience exchange rate depreciation against the U.S. dollar when many emerging markets were adjusted to the news of tapering quantitative easing in 2013.