Please wait a minute...

Frontiers of Economics in China

Front. Econ. China    2015, Vol. 10 Issue (3) : 540-565     https://doi.org/10.3868/s060-004-015-0024-6
research-article
The Determinants of Location Choices of China's ODI: Institutions, Taxation and Resources
Yongqin Wang1(),Julan Du2(),Kai Wang3
1. School of Economics, Fudan University, Shanghai 200433, China
2. Department of Economics, The Chinese University of Hong Kong, Hong Kong, China
3. Department of Economics, The Chinese University of Hong Kong, Hong Kong, China
Download: PDF(647 KB)  
Export: BibTeX | EndNote | Reference Manager | ProCite | RefWorks
Abstract

China has become the third largest source of outward direct investment (ODI). This paper studies how institutions in the host countries affect the location choices of China’s ODI. Based on a deal-level sample from 2002–2011, this paper empirically tests how political institutions, political stability, government effectiveness, regulatory quality, rule of law and contrd of corruption in the host countries affect the location choices of China’s ODI. On top of these institutional factors, we study the effects of tax evasion and natural resources in host countries, and their interactions with institutional factors. We find that political institutions in the host countries are not major concerns of the ODI, while government effectiveness, regulatory quality, and control of corruption have significant effects on the locations of ODI. In addition, China’s ODI tends to avoid countries with strict legal systems. Tax evasion and resources are also major motives of China’s ODI. General institutional quality and tax evasion are substitutes in China’s ODI location decisions.

Keywords China      ODI      institutions      tax      resources     
Issue Date: 22 October 2015
 Cite this article:   
Yongqin Wang,Julan Du,Kai Wang. The Determinants of Location Choices of China's ODI: Institutions, Taxation and Resources[J]. Front. Econ. China, 2015, 10(3): 540-565.
 URL:  
http://journal.hep.com.cn/fec/EN/10.3868/s060-004-015-0024-6
http://journal.hep.com.cn/fec/EN/Y2015/V10/I3/540
Service
E-mail this article
E-mail Alert
RSS
Articles by authors
Yongqin Wang
Julan Du
Kai Wang
Related articles from Frontiers Journals
[1] Yufei Liu, Xi Qu, Wei Wang, Xiaokun Chang. Does Population Aging Hinder the Accumulation of Human Capital? Evidence from China[J]. Front. Econ. China, 2020, 15(2): 257-281.
[2] Serdar Ongan, Ismet Gocer. The Relationship between Interest Rates and Inflation: Examining the Fisher Effect in China[J]. Front. Econ. China, 2020, 15(2): 247-256.
[3] Xin Jin. A Bayesian Nonparametric Investigation of the Predictive Effect of Exchange Rates on Commodity Prices[J]. Front. Econ. China, 2020, 15(2): 179-210.
[4] Xiaoheng Zhang, Xu Tian. Firm-Level TFP Growth in the Chinese Automobile Industry[J]. Front. Econ. China, 2020, 15(1): 103-123.
[5] Yi Che, Zuojun Fan, Yan Zhang. The Effect of Land Reallocation on Off-Farm Employments in Rural China[J]. Front. Econ. China, 2019, 14(3): 401-427.
[6] Leo H. Chan, Maritza Sotomayor, Donald Lien. Impacts of the Contributions of FDI and Remittances on the Economic Growth in Asia and Latin America: A Comparative Study[J]. Front. Econ. China, 2019, 14(3): 371-400.
[7] Yunpeng Sun, Jingjia Zhang. Effectiveness of Monetary Policy in China: Evidence from Factor-Augmented Vector Autoregression Model[J]. Front. Econ. China, 2019, 14(3): 336-370.
[8] Dani Rodrik. Where Are We in the Economics of Industrial Policies?[J]. Front. Econ. China, 2019, 14(3): 329-335.
[9] Nidhi Bagaria, Saba Ismail. Export Performance of China: A Constant Market Share Analysis[J]. Front. Econ. China, 2019, 14(1): 110-130.
[10] Xianchun Xu. The Slowdown of China’s Economic Growth in Terms of Statistics[J]. Front. Econ. China, 2019, 14(1): 72-79.
[11] Justin Yifu Lin. China’s Growth Deceleration: Causes and Future Growth Prospect[J]. Front. Econ. China, 2019, 14(1): 26-52.
[12] Guoqiang Tian. Deceleration of China’s Economic Growth: Causes and Countermeasures[J]. Front. Econ. China, 2019, 14(1): 3-25.
[13] Muhammad Zubair Mumtaz, Zachary Alexander Smith. The Determinants of Chinese Outward Foreign Direct Investment: A Closer Look[J]. Front. Econ. China, 2018, 13(4): 577-601.
[14] James J. Heckman, Shuaizhang Feng. China’s Investments in Skills[J]. Front. Econ. China, 2018, 13(4): 531-558.
[15] Jinsong Zhao, Hao Pang. Surviving Unstable Property Rights in Early Modern China: A Case Study of Young Brother Bank[J]. Front. Econ. China, 2018, 13(3): 505-530.
Viewed
Full text


Abstract

Cited

  Shared   
  Discussed