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Policy, institutional fragility, and Chinese outward foreign direct investment: An empirical examination of the Belt and Road Initiative

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Abstract

The Belt and Road Initiative (BRI) is an important policy agenda undertaken by the Chinese government. We explore how the BRI – as well as an associated policy, the creation of Chinese overseas special economic zones – influences Chinese outward foreign direct investment (FDI). We find that host-country institutional fragility positively influences Chinese FDI volumes, and that the impact of institutional fragility on Chinese inward FDI to the host is amplified in the presence of the BRI. Specifically, BRI policy facilitates FDI to countries with weaker rule of law and less government accountability. We argue that, while the BRI may actively facilitate economic growth (i.e., via infrastructure development), and in turn aspects of human development, particularly in less-developed economies, its likely impacts on political rights may not be so promising.

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Acknowledgement

This research was made possible thanks to generous support from the John Deere Foundation.

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Authors and Affiliations

  1. Durham University Business School, Durham University, Durham, UK

    Dylan Sutherland

  2. College of Business Administration, University of Northern Iowa, Cedar Falls, USA

    John Anderson & Nicholas Bailey

  3. School of Business and Law, University of Agder, Kristiansand, Norway

    Ilan Alon

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Correspondence to John Anderson.

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Accepted by Jeremy Clegg, Area Editor, 12 May 2020. This article has been with the authors for three revisions..

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Appendix

Appendix

See Tables 6 and 7.

Table 6 SOE FDI, impacts of SEZs and BRI combined, including moderation
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Table 7 Private FDI value, impacts of SEZs and BRI combined, including moderation
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Sutherland, D., Anderson, J., Bailey, N. et al. Policy, institutional fragility, and Chinese outward foreign direct investment: An empirical examination of the Belt and Road Initiative. J Int Bus Policy 3, 249–272 (2020). https://doi.org/10.1057/s42214-020-00056-8

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