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China’s Outward Foreign Direct Investment and Domestic Investment: An Industrial Level Analysis

China’s Outward Foreign Direct Investment and Domestic Investment: An Industrial Level Analysis

You, Kefei ORCID: 0000-0001-7253-5838 and Solomon, Offiong Helen (2014) China’s Outward Foreign Direct Investment and Domestic Investment: An Industrial Level Analysis. In: “China after 35 Years of Economic Transition”, May 2014, Centre for International Capital Markets (London Metropolitan University). (Unpublished)

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Abstract

In the past decade, China's outward foreign direct investment (FDI) has increased significantly. On the other hand, the Chinese economic growth model is heavily reliant on domestic investment. Our study examines the important issue of how China's domestic investment responds to its FDI outflows. We investigate this issue analyzing, for the first time, China's domestic investment at industrial level. We specifically account for the factor of government support given the significant role played by the state in the Chinese economy. Using industrial level data, we further evaluate whether domestic investment reacts to outward FDI differently between state dominated and non-state dominated industries. Our study adopts an accelerator model where the system-Generalized Method of Moments (GMM) is employed for our estimations. Our empirical results suggest that domestic investment responds positively to outward FDI in China, Furthermore, the FDI outflows influences domestic investment differently depending on the level of government support in the particular industries. Such influence is much stronger in state dominated industries than in the non-state dominated ones.

Item Type: Conference or Conference Paper (Paper)
Uncontrolled Keywords: Outward Foreign Direct Investment, China, Industry, Government, GMM
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
H Social Sciences > HG Finance
Faculty / Department / Research Group: Faculty of Business
Faculty of Business > Department of Accounting & Finance
Last Modified: 27 Feb 2019 16:01
Selected for GREAT 2016: None
Selected for GREAT 2017: None
Selected for GREAT 2018: None
Selected for GREAT 2019: None
URI: http://gala.gre.ac.uk/id/eprint/21440

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