TY - JOUR
T1 - Harmony in diversity
T2 - Can One Belt One Road initiative promote China’s OFDI?
AU - Kang, Lili
AU - Peng, Fei
AU - Zhu, Yu
AU - Pang, An
N1 - This research was funded by the China National Social Science Fund (No. 14BJL028); the Shanghai Young Eastern Scholar (No. QD2015049) and the Shanghai Dawn Scholar (No. 15SG53).
PY - 2018/9/12
Y1 - 2018/9/12
N2 - This paper investigates the effect of the One Belt One Road (OBOR) initiative on China's outward foreign direct investment (OFDI) using a dataset of all host countries for the period of 2010-2015. The employed econometric technique combines a difference-in-differences estimator with matching techniques. The results show that China's OFDI in OBOR countries is about 40% higher than in non-OBOR countries. After the initiative, the OFDI from China increases by 46.2% in OBOR countries. However, after controlling for the heterogeneity across OBOR and non-OBOR countries using the matching approach, the significance of the increasing effect caused by the OBOR initiative disappears. We also find the OBOR initiative diminishes the resource-seeking motivation and improves the market-seeking motivation of China's OFDI. Our results cast doubts on the infrastructure-led and institution-based strategy of the OBOR initiative, but support the boosting effect of the OBOR initiative on institutional cooperation and cultural convergence. Thus, the OBOR initiative is a sustainable continuation and development of the long tradition of economic, institutional, and cultural convergence with the OBOR countries, rather than a temporary policy shock.
AB - This paper investigates the effect of the One Belt One Road (OBOR) initiative on China's outward foreign direct investment (OFDI) using a dataset of all host countries for the period of 2010-2015. The employed econometric technique combines a difference-in-differences estimator with matching techniques. The results show that China's OFDI in OBOR countries is about 40% higher than in non-OBOR countries. After the initiative, the OFDI from China increases by 46.2% in OBOR countries. However, after controlling for the heterogeneity across OBOR and non-OBOR countries using the matching approach, the significance of the increasing effect caused by the OBOR initiative disappears. We also find the OBOR initiative diminishes the resource-seeking motivation and improves the market-seeking motivation of China's OFDI. Our results cast doubts on the infrastructure-led and institution-based strategy of the OBOR initiative, but support the boosting effect of the OBOR initiative on institutional cooperation and cultural convergence. Thus, the OBOR initiative is a sustainable continuation and development of the long tradition of economic, institutional, and cultural convergence with the OBOR countries, rather than a temporary policy shock.
KW - Cultural distance
KW - Institutional distance
KW - One Belt One Road (OBOR)
KW - Outward foreign direct investment (OFDI)
KW - Treatment effect models
UR - http://www.scopus.com/inward/record.url?scp=85053232671&partnerID=8YFLogxK
U2 - 10.3390/su10093264
DO - 10.3390/su10093264
M3 - Article
VL - 10
JO - Sustainability
JF - Sustainability
SN - 2071-1050
IS - 9
M1 - 3264
ER -