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How home and host country industrial policies affect investment location choice? The case of Chinese investments in the EU solar and wind industries

Author

Listed:
  • Augusto Ninni

    (University of Parma)

  • Ping Lv

    (University of Chinese Academy of Sciences)

  • Francesca Spigarelli

    (University of Macerata)

  • Pengqi Liu

    (University of Chinese Academy of Sciences)

Abstract

The paper explores the influences played by asymmetries between European and Chinese incentive policies in renewable energy sources (RES) on location choice of Chinese investments in the EU. In the last decade, while EU countries relied on demand-oriented policies in the RES, China has been directly promoting supply-side interventions to support the domestic production of components. We advance the literature on determinants of Chinese investments abroad, by including relevant variables related to industrial selective policies of RES in home and host countries. By using a firm-level database from the Ministry of Commerce, we perform logit analysis, linking the features of Chinese photovoltaic (PV) and wind investments in EU to the supporting policies, as well as to institutional factors and endowments of resources in home regions and host countries. Our paper confirms the findings of previous studies, as far as institutional factors and country endowments impact on location choice. For selective policies we get interesting outcomes. The host EU countries have acted as catalyst for Chinese investments in Europe in search for market opportunities, while generous production subsidies at provincial level in China have discouraged Chinese investments abroad.

Suggested Citation

  • Augusto Ninni & Ping Lv & Francesca Spigarelli & Pengqi Liu, 2020. "How home and host country industrial policies affect investment location choice? The case of Chinese investments in the EU solar and wind industries," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 47(4), pages 531-557, December.
    • Handle: RePEc:spr:epolin:v:47:y:2020:i:4:d:10.1007_s40812-020-00152-z
    DOI: 10.1007/s40812-020-00152-z
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    More about this item

    Keywords

    Chinese investments; Solar and wind industry; Home country; Host country; Industrial policy; Location choice;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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