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OFDI and Home Country Structural Upgrading: Does Spatial Difference Exist in China?

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  • Fengchun Li
  • Cheng Yu

Abstract

Based on Chinese provincial-level data, this paper integrates the adjustment variables of the characteristics of Chinese outward foreign direct investment (OFDI) into a “standard structural” model and analyzes the impact of OFDI on China‘s industrial upgrading. First, OFDI can promote industrial upgrading in countries that are targets of investment. Second, the rapid investment process restricts the industrial upgrading effect of OFDI. This means the different tempo will make enterprises in the investing country unable to adapt to the rapid changes in market demand. Third, the irregular investment process will restrict the industrial upgrading effect of OFDI. OFDI has a slower, planned, regular, continuous pace that gives enterprises in the country making the investment time to adjust. Last, the industrial upgrading effect of OFDI in different regions of China are affected by the characteristics of adjacent regions. That is, the OFDI in each province in China is affected by the investment mode of neighboring regions.

Suggested Citation

  • Fengchun Li & Cheng Yu, 2020. "OFDI and Home Country Structural Upgrading: Does Spatial Difference Exist in China?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(7), pages 1532-1546, May.
    • Handle: RePEc:mes:emfitr:v:56:y:2020:i:7:p:1532-1546
    DOI: 10.1080/1540496X.2019.1602037
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    Cited by:

    1. Liu, Yishuang & Liu, Wei & Zhang, Xiaoling & Dong, Hanmin & Zhao, Zhihui & Zhang, Zhan, 2024. "Domestic environmental impacts of OFDI: City-level evidence from China," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 391-409.
    2. Wang, Rui & Qi, Zhongying & Shu, Yumin, 2020. "Multiple relationships between fixed-asset investment and industrial structure evolution in China–Based on Directed Acyclic Graph (DAG) analysis and VAR model," Structural Change and Economic Dynamics, Elsevier, vol. 55(C), pages 222-231.
    3. Liao, Hongwei & Yang, Liangping & Dai, Shuanping & Van Assche, Ari, 2021. "Outward FDI, industrial structure upgrading and domestic employment: empirical evidence from the Chinese economy and the belt and road initiative," Journal of Asian Economics, Elsevier, vol. 74(C).
    4. Cai, Xiang & Zhao, Xiaohui & Jiang, Cuiting & Zhang, Liguo, 2024. "China's foreign direct investments: Do they promote domestic green technology?," Journal of Policy Modeling, Elsevier, vol. 46(1), pages 60-74.
    5. Zongxian Feng & Huiting Hua & Lingle Wang, 2024. "The Influence Mechanism of Bidirectional Foreign Direct Investment on Green Total Factor Productivity in China’s Manufacturing Industry," Sustainability, MDPI, vol. 16(15), pages 1-27, July.

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