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Country-level macro-corporate governance and the outward foreign direct investment

Author

Listed:
  • Tong Tong
  • Tarlok Singh
  • Bin Li

Abstract

Purpose - China’s outward foreign direct investment (ODI) has become a recent phenomenon in that China is now rated as the world’s third largest country for ODI. Previous studies have found that China’s ODI is driven by the attractions of natural resources and overseas markets. Yet these studies have ignored the role of corporate governance at a national level, the paper aims to discuss these issues. Design/methodology/approach - The Kaufmannet al.(1999) data set is used in our study and the data sample have covered the period from 2003 to 2012 for a comprehensive set of 171 host countries. Random effects model are applied in the paper and population average model is used to check the robustness of the results. Findings - The authors find that the effects of macro-corporate governance are distinct in different sample periods, as well as in geographical and economic regions, when attracting China’s ODI. Indicators such as political stability, the absence of violence, regulatory effectiveness, regulatory quality, the rule of law and the control of corruption are found to be positively related to China’s ODI. Originality/value - This is one of the first papers to investigate the relationship between macro-corporate governance indicators and China’s ODI. 171 countries are included in the data sample and sub-sample tests are also conducted.

Suggested Citation

  • Tong Tong & Tarlok Singh & Bin Li, 2018. "Country-level macro-corporate governance and the outward foreign direct investment," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 45(1), pages 107-123, January.
    • Handle: RePEc:eme:ijsepp:ijse-09-2016-0243
    DOI: 10.1108/IJSE-09-2016-0243
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    Citations

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    Cited by:

    1. L. Arturo Bernal Ponce & Ricardo Pérez Navarro & Mauricio Ramírez Grajeda, 2020. "Causality between Chinese investment in Latin America and the governance indicators," Competition and Regulation in Network Industries, , vol. 21(1), pages 6-17, March.
    2. Tong, Tong & Chen, Xiaoyue & Singh, Tarlok & Li, Bin, 2022. "Corporate governance and the outward foreign direct investment: Firm-level evidence from China," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 962-980.

    More about this item

    Keywords

    China; Emerging markets; FDI; Outward foreign direct investment; Macro-corporate governance; C32; F2; F14; H4; H5; K2; K3;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F2 - International Economics - - International Factor Movements and International Business
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • H4 - Public Economics - - Publicly Provided Goods
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • K2 - Law and Economics - - Regulation and Business Law
    • K3 - Law and Economics - - Other Substantive Areas of Law

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