Study On The Influence Of Institutional Environment Of Host Country On China’s OFDI Under The "One Belt And One Road" Initiative

In the context of the "One Belt And One Road",China’s direct investment in countries along the “Belt and Road” has increased year by year.In 2019,China’s direct investment in the countries along the "One Belt And One Road" reached US$18.69 billion.It is found that there are many factors affecting China’s OFDI,among which the institutional environment of the host country plays an important role.As most of the countries along the "One Belt And One Road" are developing countries,the influence of the host country’s institutional environment on China’s OFDI is particularly prominent.Although there are many researches on institutional environment at present,there is no unified conclusion on how institutional environment factors affect OFDI in host countries.Part of the research results show that China’s OFDI prefers to countries with good institutional environment,while the other part of the research results believe that China’s OFDI prefers to countries with poor institutional environment.Therefore,this paper selects the countries along the "One Belt And One Road" as research samples and explores the influence mechanism of the institutional environment of the host country on China’s OFDI through empirical research.This paper uses the relevant data of Chinese enterprises’ direct investment in 61 countries along the “One Belt and One Road” from 2009 to 2018 to study the impact of the host country’s institutional environment on OFDI.Based on the definition of institutional environment by the World Bank and the actual needs of the research,the factors of institutional environment are subdivided into political stability,government efficiency,regulatory quality,rule of law and corruption control.Using sample data to explore the influence mechanism of overall institutional environment and subdivided indicators on China’s OFDI.The results show that,the institutional environment has a significant promoting effect on China’s OFDI,among which government efficiency,the rule of law and the regulatory quality have a significant impact on OFDI,indicating that China’s OFDI prefers to countries with high government efficiency,high degree of rule of law and good quality of regulatory.According to the sample of countries with good and bad institutional environment,political stability is significant in the countries with good institutional environment,while the government efficiency,the degree of rule of law,the quality of regulatory and corruption control are significant in the countries with poor institutional environment.It indicates that institutional factors of countries along the "One Belt and One Road" represented by institutional environment WGI are relatively rough,and samples of countries along the "One Belt and One Road" need to be subdivided to explore the influence mechanism of different institutional environment factors in different samples.Finally,through the analysis of the empirical results,the full text is summarized,and feasible suggestions are made to the enterprises and the government.It is hoped that the enterprises can comprehensively analyze the host country’s institutional environment factors when making investment choices,so as to improve their own strength.The government can optimize the foreign investment management system,provide convenience for enterprises,and improve the foreign investment risk prevention system,so as to reduce the investment risk of Chinese enterprises in direct investment in the countries along the "Belt and Road",and promote the sound and rapid development of China’s economy.