Research On The Impact Of Terrorist Activities On China's Direct Investment In Developing Countries Along The "Belt And Road"

Since the “Belt and Road” initiative was launched,China has carried out multidisciplinary and deep-level economic cooperation with the majority of developing countries along the “Belt and Road”.At the end of 2018,the stock of Chinese outward foreign direct investment has reached to 116190 million dollars from 70580 million dollars in 2013,with the average growth rate 18.68%,obviously it can be seen that Chinese outward foreign direct investment in developing countries along the “Belt and Road” has ushered in a new situation of vigorous development.However,the developing countries along the “Belt and Road” are mostly located in the “arc zone” of terrorist activities that covers Middle East-Central Asia-South Asia-Southeast Asia,which makes terrorist activities in the “Belt and Road” a must for Chinese outward foreign direct investment.Studying the impact of developing countries’ terrorist activities along the “Belt and Road” on Chinese outward foreign direct investment can provide policy recommendations for ensuring the security and benefit of Chinese outward foreign direct investment.Through theoretical analysis and mechanism analysis,we drew the conclusion that terrorist activities generated in host countries suppress Chinese outward foreign direct investment by weakening the internalization-specific advantages of multinational companies and the location-specific advantages of the host countries.In order to test the impact of terrorist activities on Chinese outward direct investment,we take the data of Chinese outward foreign direct investment stock in 33 developing countries along the “Belt and Road” from 2010 to 2017 as sample.Besides,we take terrorist activities generated in host countries as independent variable.Meanwhile,we take host countries’ market size,host countries’ market potential,the availability of natural resource in host countries,host countries’ labor resource,host countries’ infrastructure,bilateral trade and the first-order lag of the dependent variable as control variables.Furthermore,we construct a dynamic panel model for empirical analysis.Through the outcome of empirical research,we find: firstly,from the temporary perspective,terrorist activities generated in the “Belt and Road” upgrade 1 standard deviation will result in 0.11% decline of the stock of Chinese outward foreign direct investment;from the long-term perspective,terrorist activities generated in the “Belt and Road” upgrade 1 standard deviation will contribute to 0.38% decline of the stock of Chinese outward foreign direct investment.Secondly,the bilateral investment treaty and the “Belt and Road” initiative can reduce the negative impact of host countries’ terrorist activities on Chinese outward foreign direct investment.Based on the research conclusions,we propose three recommendations: advancing the “Belt and Road” initiative and deepening anti-terrorism cooperation among regions;improving bilateral investment treaty and effectively improving investor protection mechanism;strengthening risk prevention awareness and appropriately adjusting the layout of outward foreign direct investment.The innovations of our research are: on the one hand,based on the eclectic theory of international production and focusing on the internalization-specific advantages of multinational companies and the location-specific advantages of the host countries,we systematically analyze the impact of terrorist activities affecting Chinese outward foreign direct investment;on the other hand,we consider the regulatory effects of the bilateral investment treaty and the “Belt and Road” initiative.