Study On Cultural Distance,Institutional Differences And China’s OFDI In Countries Along The Belt And Road

The proposal of the "Belt and Road" initiative has brought tremendous development opportunities for Chinese companies’ direct investment abroad and the investment of construction of countries along the route.However,there are also many problems.The "Belt and Road" initiative covers many countries along the Belt and Road.Each country is rooted in a unique cultural background and has certain differences in the institutional environment.This makes China face the issues of cultural distance and institutional differences between the two countries when China makes direct investment in the "Belt and Road" countries.Therefore,based on the two perspectives of cultural distance and institutional differences,this paper takes China’s investment stocks in the "Belt and Road" countries as research objects to explore the relationship between cultural distance and institutional differences and China’s OFDI in the "Belt and Road" countries.This article expounds the current status of China’s foreign direct investment and analyzes the current status of China’s investment in countries along the "Belt and Road" and possible problems in the investment process in terms of investment scale and investment location.At the same time,it discusses the influence mechanism of cultural distance and institutional differences on OFDI and puts forward the hypothesis that cultural distance will hinder OFDI and institutional differences will promote OFDI.Also,Hofstede’s cultural dimension theory and KSI index are used to measure cultural distance,and WGI governance indicators are used to measure institutional differences.On this basis,this paper selects panel data of China’s investment in 31 countries along the "Belt and Road" from 2008 to 2017 for full-sample regression and sub-sample regression,and empirically studies the relationship between institutional differences and cultural distance and China’s OFDI.Among them,the sub-sample regression first divides the sample countries into three sub-samples in East Asia,South Asia and Southeast Asia,Eastern Europe and West Asia according to regions.Second,according to the economic level of the countries along the route,the sample countries are classified into two parts: developed economies and developing economies.Then,based on the measurement of cultural distance,this paper considers the year of the establishment of diplomatic relations between China and the "Belt and Road" countries,so as to re-measure the cultural distance,so as to test the robustness of the model.The results show that the regressionresults of the econometric model in this paper are robust.Finally,based on the conclusions of this article and China’s OFDI in the "Belt and Road" countries,relevant suggestions are put forward.