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The effectiveness of government incentives for outward investment: The case of China's Belt and Road Initiative

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  • Hangtian Xu
  • Fuqiang Yang
  • Wenzhuo Zheng

Abstract

Chinese government introduced a package of incentives to encourage enterprise internationalization under the 2013 Belt and Road Initiative. There is regional variation of this policy incentive, based on which, we examine its impact on listed firms' outward investment. The results evident resource misallocation in firms in specific industries which received incentives; instead of utilizing them for overseas investment, the beneficiary firms were directed toward increasing domestic investment. Contrarily, firms in industries that were not incentivized (restricted industries whose domestic development is not encouraged) were inclined to engage in overseas investment. We provide possible explanations.

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  • Hangtian Xu & Fuqiang Yang & Wenzhuo Zheng, 2024. "The effectiveness of government incentives for outward investment: The case of China's Belt and Road Initiative," Contemporary Economic Policy, Western Economic Association International, vol. 42(3), pages 498-523, July.
    • Handle: RePEc:bla:coecpo:v:42:y:2024:i:3:p:498-523
    DOI: 10.1111/coep.12646
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