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China’s Outward FDI in Indonesia: Spatial Patterns and Determinants

Author

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  • Yu Fu

    (The School of Geography, Nanjing Normal University, Nanjing 210023, China
    The Jiangsu Center for Collaborative Innovation in Geographical Information Resource Development and Application, Nanjing 210023, China)

  • Agus Supriyadi

    (The School of Geography, Nanjing Normal University, Nanjing 210023, China
    The Jiangsu Center for Collaborative Innovation in Geographical Information Resource Development and Application, Nanjing 210023, China
    The Inspectorate Banjar City Government, Banjar 46311, Indonesia)

  • Tao Wang

    (The School of Geography, Nanjing Normal University, Nanjing 210023, China
    The Jiangsu Center for Collaborative Innovation in Geographical Information Resource Development and Application, Nanjing 210023, China)

Abstract

China has gradually become an important world investor with the implementations of its “Going Global” and “Belt and Road” strategy initiatives. Indonesia is the world’s largest archipelagic country, and has the largest economy of the ASEAN (Association of Southeast Asian Nations). Therefore, Indonesia is an important node for China’s implementation of its “Belt and Road” initiative. However, the existing research results regarding China’s OFDI (Outward Foreign Direct Investment) in Indonesia have indicated that little focus has been placed on the distribution patterns and determinants at the provincial levels. In this study, spatial analysis and mathematical statistics methods were used to analyze the temporal and spatial pattern evolution characteristics of China’s OFDI in Indonesia for the period ranging from 2006 to 2016. Also, the mechanism of the pattern evolution was quantitatively identified. The results obtained in this research study indicated the following: (1) China’s OFDI in Indonesia was observed to be characterized by fluctuations in investment amounts and rising numbers of investment projects, also, the investment amounts and number of projects were spatially dispersed; (2) the overall spatial evolution of China’s OFDI in Indonesia was found to be characterized by certain patterns, such as “west higher than the east, and south higher than the north” patterns. Moreover, the direction of the investment gravity center was determined to be obviously distinct during different periods; (3) high-level investments were found to be focused in only a few provinces, meanwhile, the majority of the provinces continued to be in a low-level stable state of investment from China; (4) this study’s OLS (Ordinary Least Square) regression and step-wise regression models revealed that institutional factors, political relations, and human resources were the most important factors which had affected China’s OFDI in Indonesia during the study period.

Suggested Citation

  • Yu Fu & Agus Supriyadi & Tao Wang, 2018. "China’s Outward FDI in Indonesia: Spatial Patterns and Determinants," Sustainability, MDPI, vol. 10(12), pages 1-20, December.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:12:p:4632-:d:188376
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    2. YAĞAR EGİLMEZ, Funda, 2020. "The Long-Run Relationship Between Airline Transport, Export Volume And Economic Growth: Evidence From Usa," Academic Review of Humanities and Social Sciences, Bursa Teknik Üniversitesi, vol. 3(2), pages 466-482.
    3. Tina Melinda & Christina Whidya Utami & Tao Wang & Aria Ganna Henryanto & Agus Supriyadi, 2022. "Are There Effects of the Investment Spillover in Central Sulawesi?," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 248-260.
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    5. Chaminda Abeysinghe & Hashan Wijesinghe, 2021. "Geo-economics of the Global Maritime Fulcrum (GMF) vision of Indonesia," Technium Social Sciences Journal, Technium Science, vol. 16(1), pages 561-573, February.

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