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Effects of Host-Country Corruption on China’s Outward Foreign Direct Investments: Expert Knowledge Versus Public Awareness

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  • Lili Pan
  • Lin Wang
  • Qianqian Feng

Abstract

Corruption in the host nation is a key issue influencing foreign direct investment. Most existing studies use the expert-knowledge-based corruption index as a proxy for corruption. However, the validity of these published corruption indexes is often questioned by scholars and experts. By introducing Internet data to evaluate public corruption awareness levels, this paper uses two different corruption proxy variables to investigate the relationship between host country corruption and China’s OFDI. In addition, these relationships are further compared between the Belt and Road (B&R) countries and non-B&R countries. The empirical results show that there are negative correlations between host country corruption and China’s OFDI flow for the whole sample, B&R countries and non-B&R countries. The empirical results of this paper serve as a reference for Chinese enterprises to make overseas investment decisions.

Suggested Citation

  • Lili Pan & Lin Wang & Qianqian Feng, 2022. "Effects of Host-Country Corruption on China’s Outward Foreign Direct Investments: Expert Knowledge Versus Public Awareness," SAGE Open, , vol. 12(4), pages 21582440221, December.
    • Handle: RePEc:sae:sagope:v:12:y:2022:i:4:p:21582440221141701
    DOI: 10.1177/21582440221141701
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