Foreign Direct Investment, Institutional Quality, and Financial Development along the Belt and Road: An Empirical Investigation

2019 ◽  
Vol 55 (14) ◽  
pp. 3275-3294 ◽  
Author(s):  
Abuduwali Aibai ◽  
Xianjing Huang ◽  
Yu Luo ◽  
Yuchao Peng
Keyword(s):  
Foreign Direct Investment ◽  
Financial Development ◽  
Direct Investment ◽  
Empirical Investigation ◽  
Institutional Quality ◽  
Belt And Road ◽  
The Belt And Road

scholarly journals Financial Development and Foreign Direct Investment—The Moderating Role of Quality Institutions

2020 ◽  
Vol 12 (9) ◽  
pp. 3556 ◽  
Author(s):  
Mollah Aminul Islam ◽  
Muhammad Asif Khan ◽  
József Popp ◽  
Wlodzimierz Sroka ◽  
Judit Oláh
Keyword(s):  
Foreign Direct Investment ◽  
Financial Markets ◽  
Financial Development ◽  
Financial Institutions ◽  
Direct Investment ◽  
Institutional Quality ◽  
Host Countries ◽  
Depth Analysis ◽  
Belt And Road ◽  
Moderating Role

Considering the importance of foreign direct investment (FDI) inflows for the sustainable economic advancement of a host country, this paper investigates the financial development and FDI nexus, using institutional quality as a moderator. The sample consists of 79 Belt and Road Initiative (BRI) partner countries, as these countries are entering a new age of integration, foreign trade, and mutual development. The empirical findings of conventional and robust estimators show that the financial development of BRI host countries significantly attracts FDI, while the institutional quality plays a significant moderating role in this relation. The in-depth analysis offers the insight that financial markets are less attractive to FDI relative to financial institutions. Thus, policymakers are advised to uphold sound financial institutions to make the country more attractive to overseas investors, while concentration on financial markets may multiply the benefits of FDI. The results are robust to alternative proxies of the key variables and alternative methodologies.

Institutional quality and its impact on the facilitation of foreign direct investment

2019 ◽  
Vol 12 (3) ◽  
pp. 167-188
Author(s):  
Fuzhong Chen ◽  
Guohai Jiang ◽  
Wenting Wang
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Institutional Quality ◽  
Data Set ◽  
Impact Mechanism ◽  
Content Type ◽  
Extant Literature ◽  
Belt And Road ◽  
The Impact ◽  
The Belt And Road

Purpose Improvements in the facilitation of foreign direct investment (FDI) through institutional quality play a significant role in the establishment of an open economy. However, the impact of institutional quality on the facilitation of FDI along the Belt and Road countries is not well explored. This study aims to empirically investigate the influence of institutional quality on the degree of FDI facilitation and explore the impact mechanism using national-level panel data from countries along the Belt and Road. Design/methodology/approach For the data set, all variables have been normalized, and principal component analysis has been used. For the empirical models, robust standard errors and dynamic GMM method have been used to alleviate heteroscedasticity and endogeneity. Findings The empirical results indicate that institutional quality has a significantly positive effect on the degree of FDI facilitation. Furthermore, the impact mechanism involves the mediating mechanism. In other words, the effect of institutional quality that promotes FDI facilitation is influenced by factors such as laws and regulations. In addition, the implementation of the Belt and Road Initiative (BRI) has significantly enhanced the promotional effect of institutional quality on the facilitation of FDI. Practical implications Policymakers should focus on improving the institutional quality and the influence of mediating mechanisms, such as policies and regulations, in the institutional environment. Originality/value This study contributes to extant literature on the impact of institutional quality on FDI facilitation of significance to China, the BRI countries, and other countries to facilitate openness in international investment. This study also contributes to the extant literature on the influence of the BRI on the development of BRI countries. This will inform policy makers, investment institutions and enterprises about the development of effective policies to aid the development of BRI countries and improve the efficiency and the returns on FDI.

scholarly journals The Trend of Reduced Chinese Investments in the Belt and Road Initiative: Spending Contentions and Preparations for an Upcoming Financial Crisis

Desafíos ◽  
2020 ◽  
Vol 32 (1) ◽  
Author(s):  
Samuel Spellmann ◽  
Alexandre César Cunha Leite
Keyword(s):  
Foreign Direct Investment ◽  
Financial Crisis ◽  
Direct Investment ◽  
Outward Foreign Direct Investment ◽  
Belt And Road Initiative ◽  
Belt And Road ◽  
The Belt And Road

Este artículo busca establecer explicaciones para el cambio en el patrón de inversiones presentado en el flujo de inversión directa no financiera (IED) de China en la Nueva Ruta de la Seda (NRS). En primer lugar, la reducción de las inversiones en nrs se verifica a través del análisis del Statistical Bulletin of China’s Outward Foreign Direct Investment entre los años 2013 y 2016. Después, al tratar de explicar la reducción del flujo de ied no financiera de China a nrs, este artículo analiza dos hipótesis. Primero, retrata las medidas actuales de control del gasto público de China, que abordan el crecimiento del exceso de capacidad del país, mientras discute las similitudes entre la economía china y la crisis japonesa de principios de la década de 1990. Posteriormente, contempla la posibilidad de que los preparativos realizados por las autoridades chinas se contrarresten por la inestabilidad anticipada de los mercados mundiales. La confluencia de estos factores ayuda a explicar la reducción del flujo no financiero de ied a nrs, que contrasta con la tendencia contemporánea hacia la inversión china en el mundo durante el mismo período.

scholarly journals China’s One Belt and One Road Initiative and Outward Chinese Foreign Direct Investment in Europe

2019 ◽  
Vol 11 (24) ◽  
pp. 7055 ◽  
Author(s):  
Degong Ma ◽  
Chun Lei ◽  
Farid Ullah ◽  
Raza Ullah ◽  
Qadar Bakhsh Baloch
Keyword(s):  
Foreign Direct Investment ◽  
Direct Investment ◽  
Negative Impact ◽  
Positive Impact ◽  
European Countries ◽  
Belt And Road Initiative ◽  
Upward Trend ◽  
Belt And Road ◽  
Chinese Foreign Direct Investment ◽  
The Belt And Road

For the last few years, the execution of the Belt and Road Initiative (hereinafter referred to as the BRI) and China’s outward foreign direct investment (hereinafter referred to as OFDI) in Europe have seen a significant upward trend. For our current paper, we collected empirical data pertaining to China’s OFDI and foreign trade (gathered from 21 European countries in the trade gravity market for the period 2003 to 2016) that yielded the following results: (a) China’s OFDI to Europe has significantly promoted international trade between China and European countries. On the other hand, OFDI has equally promoted China’s exports to European counties, while it has not encouraged China’s imports from European counties. (b) The Belt and Road Initiative has had a positive impact on China’s exports to European counties and has had a negative impact on China’s imports from European counties. (c) There have been both complementary trade impacts and substitution trade impacts when China has directly invested in European countries, but the complementary impact was much stronger than its substitution impact in the chosen sample period.

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