Dynamic relationship between China’s inward and outward foreign direct investments
This paper studies the dynamic relationship of China’s inward and outward foreign direct investments (FDI). It first identifies the key determinants of China’s outward FDI (OFDI) in 172 host countries during 2003-09 using a partial stock adjustment model. It finds strong evidence of dynamic adjustme...
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| Format: | Article |
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Elsevier
2016
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| Online Access: | https://eprints.nottingham.ac.uk/33832/ |
| _version_ | 1848794714204012544 |
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| author | Yao, Shujie Wang, Pan Zhang, Jing Ou, Jinghua |
| author_facet | Yao, Shujie Wang, Pan Zhang, Jing Ou, Jinghua |
| author_sort | Yao, Shujie |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | This paper studies the dynamic relationship of China’s inward and outward foreign direct investments (FDI). It first identifies the key determinants of China’s outward FDI (OFDI) in 172 host countries during 2003-09 using a partial stock adjustment model. It finds strong evidence of dynamic adjustment in China’s OFDI stock with an agglomeration effect. The dynamic adjustment and agglomeration effects are stronger in “high-tech” countries than in “low-tech” ones but indifferent in host country’s resource endowments and income levels. The empirical results suggest that there exists a substantial adjustment cost in China’s OFDI and that China’s existing OFDI stock can gradually adjust towards its long term equilibrium level, which is not only greater but also more volatile than the actual stock. Of particular interest is that we find a strong and positive relationship between lagged inward FDI (IFDI) and contemporaneous OFDI, implying that capital outflow from China has been partially induced by the countries which have invested in China. |
| first_indexed | 2025-11-14T19:20:35Z |
| format | Article |
| id | nottingham-33832 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| last_indexed | 2025-11-14T19:20:35Z |
| publishDate | 2016 |
| publisher | Elsevier |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-338322020-05-04T20:01:34Z https://eprints.nottingham.ac.uk/33832/ Dynamic relationship between China’s inward and outward foreign direct investments Yao, Shujie Wang, Pan Zhang, Jing Ou, Jinghua This paper studies the dynamic relationship of China’s inward and outward foreign direct investments (FDI). It first identifies the key determinants of China’s outward FDI (OFDI) in 172 host countries during 2003-09 using a partial stock adjustment model. It finds strong evidence of dynamic adjustment in China’s OFDI stock with an agglomeration effect. The dynamic adjustment and agglomeration effects are stronger in “high-tech” countries than in “low-tech” ones but indifferent in host country’s resource endowments and income levels. The empirical results suggest that there exists a substantial adjustment cost in China’s OFDI and that China’s existing OFDI stock can gradually adjust towards its long term equilibrium level, which is not only greater but also more volatile than the actual stock. Of particular interest is that we find a strong and positive relationship between lagged inward FDI (IFDI) and contemporaneous OFDI, implying that capital outflow from China has been partially induced by the countries which have invested in China. Elsevier 2016-09 Article PeerReviewed Yao, Shujie, Wang, Pan, Zhang, Jing and Ou, Jinghua (2016) Dynamic relationship between China’s inward and outward foreign direct investments. China Economic Review, 40 . pp. 54-70. ISSN 1043-951X Foreign direct investment; Dynamic adjustment; Agglomeration effect; Partial stock adjustment; China http://www.sciencedirect.com/science/article/pii/S1043951X16300608 doi:10.1016/j.chieco.2016.05.005 doi:10.1016/j.chieco.2016.05.005 |
| spellingShingle | Foreign direct investment; Dynamic adjustment; Agglomeration effect; Partial stock adjustment; China Yao, Shujie Wang, Pan Zhang, Jing Ou, Jinghua Dynamic relationship between China’s inward and outward foreign direct investments |
| title | Dynamic relationship between China’s inward and outward foreign direct investments |
| title_full | Dynamic relationship between China’s inward and outward foreign direct investments |
| title_fullStr | Dynamic relationship between China’s inward and outward foreign direct investments |
| title_full_unstemmed | Dynamic relationship between China’s inward and outward foreign direct investments |
| title_short | Dynamic relationship between China’s inward and outward foreign direct investments |
| title_sort | dynamic relationship between china’s inward and outward foreign direct investments |
| topic | Foreign direct investment; Dynamic adjustment; Agglomeration effect; Partial stock adjustment; China |
| url | https://eprints.nottingham.ac.uk/33832/ https://eprints.nottingham.ac.uk/33832/ https://eprints.nottingham.ac.uk/33832/ |