Factor Endowment And Institutional Distance Influence China’s OFDI Research

The “Going Global” strategy and the “One Belt and One Road” initiative are major strategic measures that my country is currently taking to adapt to the new changes in the world economy.Among them,OFDI is an important way for China to“go global” under the “One Belt and One Road” initiative.Existing research has confirmed that the difference in factor endowments and institutional distance between the host country and the home country are both important factors considered by OFDI in the home country.However,although China and the countries along the “Belt and Road” are highly complementary in terms of their factor endowments,their advantages in factor endowments cannot be fully utilized.At the same time,the systems of China and the countries along the “Belt and Road” are quite different,with very different political systems,economic environments,and cultural customs.Therefore,this paper studies the relationship between factor endowment differences,institutional distance,and China’s OFDI in the “Belt and Road” from theoretical basis,status quo analysis,and empirical testing.The specific manifestations are as follows:First of all,systematically sort out related theories.From the main theories of China’s OFDI in the countries along the route,the general theory of the influence of factor endowment on OFDI in the countries along the route,the general theory of the influence of institutional distance on OFDI in the countries along the route,the mechanism of the influence of institutional distance on the OFDI in the countries along the route,etc.It expounds the theoretical basis of the influence of factor endowment differences and institutional distance on OFDI.Secondly,analyze the status quo of China’s OFDI in the countries along the route.The study found that China’s OFDI development in the countries along the route is generally good,but there are regional and industry differences.In addition,while China has opportunities for direct investment in countries along the route,there are also some obstacles.Third,calculate the factor endowment and institutional distance between China and the countries along the route.From the comparison of factor endowments between China and countries along the route,it can be seen that the factor endowments between China and the “Belt and Road” regions are highly complementary.From the research on the institutional distance between China and the countries along the route,it is found that the political system distance,economic system distance,cultural system distance and comprehensive system distance between China and the countries along the route are uneven.Then,empirically test the impact of factor endowments and institutional distance on OFDI in countries along the route.Among them,the difference in factor endowment includes labor force difference,human capital difference,tangible capital difference,natural resource difference and technological difference,and institutional distance includes political system distance,economic system distance,cultural system distance,and comprehensive system distance.From the test of factor endowment and political system distance affecting China’s OFDI in countries along the Belt and Road,it can be seen that,on the whole,differences in relative labor force,human capital,and natural resources have a restraining effect,and differences in tangible capital and technology have positive effects,and political Institutional distance has increased China’s tendency toward OFDI in countries along the route.The heterogeneity group test confirms that the difference in factor endowments and the distance of political systems have multiple distances in the influence of China’s OFDI in the countries along the route.The test result of the interaction term shows that the difference between political system distance and human capital affects China’s substitution relationship in OFDI in countries along the route.From the test of factor endowment and economic system distance affecting China’s OFDI in the countries along the route,it can be seen that,on the whole,the impact of economic system distance on China’s OFDI in the countries along the route shows a “U”-shaped characteristic of first decline and then rise.The heterogeneity group test shows that different dimensions of economic system distance and different types of factor endowments have different impacts on China’s OFDI in countries along the route.From the test of factor endowment and cultural system distance affecting China’s OFDI in countries along the route,it is found that the overall sample shows that relative labor differences and human capital differences show significant negative effects,while physical capital differences and technological differences show significant positive effects,Cultural system distance helps China’s OFDI in countries along the route.Dimensional samples show that China has significant dimensional differences in OFDI in countries along the route.The threshold effect shows that the difference in factor endowment has a cultural system distance threshold effect on the influence of China’s OFDI in countries along the route,but the total cultural system distance and the different dimensions of the cultural system distance have different threshold effects.The test of the influence of factor endowment and comprehensive institutional distance on China’s OFDI in the countries along the route found that the influence of comprehensive institutional distance on China’s OFDI in the countries along the route shows a “U”-shaped characteristic of first decline and then rise.Time-based inspections show that after the “Belt and Road” initiative was put forward in 2013,the impact of natural resource differences on China’s OFDI in countries along the route has changed from a negative effect to a positive effect.It can be seen from the interaction term test that with the expansion of the comprehensive institutional distance between China and the countries along the route,the comprehensive institutional distance between the countries along the route and China and the difference in natural resources affect China’s OFDI in the countries along the route from complementation to substitution.Finally,this article focuses on foreign direct investment based on differences in factor endowments,emphasis on the impact of political system distance on China’s OFDI,correct understanding of the impact of economic system distance on China’s OFDI in countries along the route,and face up to the cultural differences brought to China’s OFDI in countries along the route.Relevant countermeasures and suggestions have been put forward in terms of challenges and opportunities,and rational use of the difference in factor endowments and institutional distance between China and countries along the route.