Transformations  in
Business & Economics

EFFECTIVENESS OF LOCATION SELECTION OF CHINA'S FDI FOR FINANCIAL WELL-BEING: ROLE OF DIGITALIZATION⁴
Jiajun Tian, Youjin Liu

ABSTRACT: A difference-in-difference (DID) model is constructed in this study to empirically estimate the flow panel data of China's outward foreign direct investment (OFDI) flow related to various countries, with the help of the CEIC database for the time period ranging from 2008 to 2019. The study results demonstrate that the Belt and Road Initiative (BRI) intensified the direct intention of China’s enterprises to invest in the Belt and Road economies. Nevertheless, the extent of such effect primarily rises and subsequently drops over the period. Meanwhile, the risk of inaccurate regression estimations arising from the uncertain elements and missing key variables is avoided through a placebo test which is based on a vertical- and horizontal movement of policy shocks. To sum up, this study undertakes a brief analysis of the regional structure and development trend of China's FDI in the BRI countries.

KEYWORDS:  digital economy, financial well-being, OFDI, home country policy, difference-in-difference model (DID), strategic management

JEL classification:  G00, O30, F21, H60, C21, L20.

⁴Acknowledgments:  This study was funded by Major Projects of the National Philosophy and Social Science Foundation of China (17ZDA046).