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Evaluating the impact of OFDI on the growth quality of industrial firms: A dual-perspective analysis from China

Author

Listed:
  • Peng, Dan
  • Wang, Ziqi
  • Kong, Qunxi
  • Cai, Molly

Abstract

This study addresses a key question: Does outward foreign direct investment (OFDI) by Chinese firms improve the quality of economic growth? We explore this question using a dataset of over 250,000 industrial firms from 2009 to 2013, employing a propensity score matching method. First, our analysis shows that OFDI broadly enhances the quality of economic growth. However, when control variables are taken into account, their influence on growth efficiency appears to be inhibitory. Second, firms engaged in OFDI have a markedly positive impact on the quality of their economic growth compared to non-OFDI firms. Third, our investigation into firm heterogeneity reveals that OFDI firms that invest in developed countries and focus on trade sales benefit significantly from the quality of their economic growth, regardless of the depth of investment. These insights provide a critical empirical lens for understanding Chinese firms' OFDI strategies and a valuable reference for shaping China's path towards a ‘quality’ economy.

Suggested Citation

  • Peng, Dan & Wang, Ziqi & Kong, Qunxi & Cai, Molly, 2024. "Evaluating the impact of OFDI on the growth quality of industrial firms: A dual-perspective analysis from China," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 1616-1627.
    • Handle: RePEc:eee:reveco:v:92:y:2024:i:c:p:1616-1627
    DOI: 10.1016/j.iref.2024.01.029
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