Institutional Factor Affecting on China’s Outward Foreign Direct Investments Stocks of “OBOR” Countries Using an Empirical Test of Panel Data with Gravity Model

Abstract

Over the years, China has more and more the “Outward Foreign Direct Investment: OFDI” in the “One Belt and One Road: OBOR” project. Meanwhile, n ew institutional economics has also springing up and developing. Various scholars have begun to introduce institutional factors into the research of OFDI in addition to the factors such as host country's market size and infrastructure. There are difference s in the political, economy and legal systems among the countries along the “OBOR” countries, which make the location choices of institutional factors in enterprises' OFDI different. Therefore, this research chooses the institutional factors as the researc h perspective, divides the institutional factors into four sub factors: politic, economy, law and culture, and takes 37 countries along “OBOR” as the research objects, and employs the panel data from 2008 2017 to select three control variables, including m arket scale, economic environment and geographical distance, so as to establishes an extended investment gravity model. The regression results show these institutional factors have a significant impact on distribution of China's foreign investment stock, e conomic institutional factors have a significant positive effect on China's foreign investment stock, legal institutional factors have significant negative effect, and the political institutional factors are all positive effects except voice and accountabi lity. In terms of cultural environment and other factors, Chinese enterprises prefer the state investment with small cultural distance, close geographical location and large market scale. Finally, based on the results of empirical analysis, this study provides policy recommendations from the two aspects of the Chinese government and enterprises, in order to give some reference to development of Chinese enterprise investments.