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An Investigation of Confucius Institute’s Effects on China’s OFDI via Cultural Difference and Institutional Quality

Author

Listed:
  • Chensheng Xu

    (Guangdong University of Foreign Studies, School of Economics and Trade)

  • Feng Yao

    (West Virginia University, Department of Economics)

  • Fan Zhang

    (West Virginia University, Department of Economics)

Abstract

This paper uses a panel data of China's outward foreign direct investment (OFDI) from 2004-2012 to investigate the influence of Confucius Institute on China's OFDI. We find that Confucius Institute, as a comprehensive platform for China's foreign cultural exchange, has a significant positive effect on China’s OFDI. Interestingly, the positive effect can be reduced with larger cultural difference and can be increased in host countries with lower institutional quality. Correspondingly, we find that Confucius Institute’s impact on China’s OFDI is more obvious in host countries with smaller cultural difference or lower institutional quality.

Suggested Citation

  • Chensheng Xu & Feng Yao & Fan Zhang, 2015. "An Investigation of Confucius Institute’s Effects on China’s OFDI via Cultural Difference and Institutional Quality," Working Papers 15-45, Department of Economics, West Virginia University.
    • Handle: RePEc:wvu:wpaper:15-45
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    File URL: https://researchrepository.wvu.edu/cgi/viewcontent.cgi?article=1175&context=econ_working-papers
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    Cited by:

    1. Akhtaruzzaman, Muhammad & Berg, Nathan & Lien, Donald, 2017. "Confucius Institutes and FDI flows from China to Africa," China Economic Review, Elsevier, vol. 44(C), pages 241-252.
    2. Jin-Young Jung & Wei Wang & Sung-Woo Cho, 2020. "The Role of Confucius Institutes and One Belt, One Road Initiatives on the Values of Cross-Border M&A: Empirical Evidence from China," Sustainability, MDPI, vol. 12(24), pages 1-20, December.
    3. Liu, Min & Su, Cong & Wang, Fangfang & Huang, Liangxiong, 2020. "Chinese cross-border M&As in the “One Belt One Road” countries: The impact of Confucius Institutes," China Economic Review, Elsevier, vol. 61(C).

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    More about this item

    Keywords

    Confucius Institute; foreign cultural exchange; outward foreign direct investment (OFDI); heterogeneous effect;
    All these keywords.

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