Research On The Influencing Factors Of China's Outward Foreign Direct Investment In Countries Along The "The Belt And Road"

This paper focuses on the analysis of the influencing factors of China's Outward Foreign Direct Investment(OFDI)in Countries along the "The Belt and Road",and mainly focuses on the study of the influence and role of cultural distance and political risk in China's OFDI.Based on the six dimensions database of cultural value orientation of Hofstede and the ICRG indicator database,this paper excludes 31 countries which are not in the database or exist serious data missing in the total 64 "The Belt and Road" countries with reference to the consensus that most of the literature,and finally adopted the data of 33 countries from 2003 to 2016.What's more,the extended investment gravity model is applied to conduct the regression.Having considered the influence of gross domestic product(GDP)of the investor country,GDP of host country,geographic distance between the two countries and other variables,at the same time,the bilateral trade volume between the two countries and the signing of bilateral investment agreements are incorporated into the model as control variables.In the integral regression process,after the unit root test,cointegration test,multicollinearity test and endogeneity test of the data,firstly,fixed effect model is used for regression to this short panel data determined by the Hausman test.In addition,considering the endogeneity and heteroscedasticity of the model,the two-stage least squares estimation is finally adopted to obtain more robust regression results and conduct analysis and the result finds that there is an obvious negative correlation between the cultural distance and the outward foreign direct investment,which directly proves the hypothesis of outsiders'disadvantages.Besides,there is a positive correlation between political risk and foreign direct investment.It is believed that China has "risk preference" in the outward foreign direct investment of countries along "The Belt and Road".In order to further test whether there exists a nonlinear relationship,that is to test whether there is u-shaped or s-shaped relationship between cultural distance and outward foreign direct investment,this paper further adopts the square and cube of the cultural distance into the regression model.The regression result completely characterizes a u-shaped relationship between them and reject the hypothesis of s-shaped relationship.In the robustness test,considering that possibility of the existence of multicollinearity between the square term of cultural distance and the primary term of it,which may affect the robustness of the conclusion.In this way,on the one hand,a nonlinear threshold regression model is used to test the u-shaped relationship,and the result is also in line with the expectation,which also shows that there is a possibility that outsiders benefit exceeds the outsiders'disadvantages.On the other hand,the promotion effect of political risk on OFDI is also verified by variable substitution without multicollinearity,and the results of the main control variables are consistent with the expected results,consistent with the general research conclusions as well as.The final result shows that in China's outward foreign direct investment in countries along the "The Belt and Road",cultural distance and OFDI are not only negatively correlated,but also have a threshold effect.When the cultural distance is small,OFDI decreases with the increase of cultural distance.When the cultural distance is large,OFDI expands with the increase of cultural distance.What's more,political risk has a significant promoting effect on OFDI,and China shows a trend of risk preference in the process of outward foreign direct investment in countries along "The Belt and Road",which may result from the insufficient understanding of political risk and relatively strong anti-risk ability in the investment field.