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Can FDI and ODI two-way flows improve the quality of economic growth? Empirical Evidence from China

Author

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  • Sumei Luo
  • Yixiang Shi
  • Yongkun Sun
  • Zhiqi Zhao
  • Guangyou Zhou

Abstract

Different from the existing literature which only studied the unilateral impact of the FDI or the ODI on economic growth, this paper took both the FDI and the ODI into the analysis framework of international capital flow on economic growth, and tried to introduce the mediating effect model to test the transmission mechanism and influence effect of international capital two-way flow on the economic growth. The results showed that both the FDI and the ODI can significantly improve the quality of economic growth, and the role of the FDI was stronger than that of the ODI. At the same time, the FDI and the ODI had obvious regional heterogeneity in promoting the quality of economic growth. International capital flow mainly requires three mediating effects to improve the quality of economic growth, which are the employment, the technology spillover as well as the output efficiency. The three effects of the FDI have a played significant role in promoting the quality of economic growth, while the ODI mainly plays a role through the improvement of output efficiency and technology reverse spillover. There are also significant regional differences in mediating effects.

Suggested Citation

  • Sumei Luo & Yixiang Shi & Yongkun Sun & Zhiqi Zhao & Guangyou Zhou, 2021. "Can FDI and ODI two-way flows improve the quality of economic growth? Empirical Evidence from China," Applied Economics, Taylor & Francis Journals, vol. 53(44), pages 5028-5050, September.
    • Handle: RePEc:taf:applec:v:53:y:2021:i:44:p:5028-5050
    DOI: 10.1080/00036846.2021.1914318
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    Cited by:

    1. Zhao Liu & Lan-Ye Wei, 2022. "Effects of ODI and export trade structure on CO2 emissions in China: nonlinear relationships," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(12), pages 13630-13656, December.
    2. Pengfei Cheng & Xingang Huan & Baekryul Choi, 2022. "The Comprehensive Impact of Outward Foreign Direct Investment on China’s Carbon Emissions," Sustainability, MDPI, vol. 14(23), pages 1-16, December.
    3. Xiaoxi Wang & Yaojun Zhang & Danlin Yu & Xiwei Wu & Ding Li, 2022. "Changes in Demographic Factors’ Influence on Regional Productivity Growth: Empirical Evidence from China, 2000–2010," Sustainability, MDPI, vol. 14(7), pages 1-19, April.
    4. Jen‐Chung Mei, 2023. "Foreign direct investment and relative capacity: Theory and evidence," Economics of Transition and Institutional Change, John Wiley & Sons, vol. 31(4), pages 1175-1214, October.
    5. 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.
    6. Jincan Hu & Junyi Liang & Litao Tian & Shaojian Wang, 2023. "Measurement and Coupling Coordination of High-Quality Development in Guangdong Province of China: A Spatiotemporal Analysis," IJERPH, MDPI, vol. 20(5), pages 1-20, February.
    7. Yi Zhang & Guangqiu Huang, 2023. "Identifying network structure characteristics and key factors for the co-evolution between high-quality industrial development and ecological environment," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(7), pages 6591-6625, July.

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