The Impact Of Host Country’s Institutional Quality On China’s OFDI

Since China’s Reform and Opening Up,the scale of China’s outward foreign direct investment has improved a lot.Most areas involved in the Belt and Road Initiative seem to be the emerging economies and developing countries.The population of these areas are 63% of the world,but the GDP are less than a third.There are a large space for improvement.However,when we invest in these areas,the problem we must face with will be more complex than the developed countries in Europe.To solve the problem of OFDI,many researchers has carried out a lot of research,and they have provided certain theoretical support for us.Firstly,this paper summarized the previous work of experts and scholars.Then it analyzed the mechanism how institutional quality affects China’s OFDI and it explained the current situation and characteristics of China’s OFDI.Finally,this paper made empirical analysis how the quality system of the host country affects China’s OFDI and put forwarded some suggestions for the government.Research results of this paper are mainly as follows:Firstly,this paper introduces seven traditional variables as control variables to the model,and the result shows that China’s enterprises invest in countries along with the Belt and Road Initiative have a large market and the motivation to find resources.Distance has a significant negative impact on it,and the more open of the host country market,the more direct investment to be attracted in China.China tends to put out technology to the host country,but we may not form a long-term investment system.The effect of macroeconomic stability of the host country on foreign investment is not significant.In this paper,we introduce the model to analyze the influence of the host country’s economic system on China’s direct foreign investment.The regression results show that the sound economic system has a positive effect on China’s direct foreign investment.