Policy, Institutional Fragility, and Chinese Outward Foreign Direct Investment: An Empirical Examination of the Belt and Road Initiative

Sutherland, D.; Anderson, J.R.; Bailey, N.; Alon, I.

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.

Citation

Sutherland, D., Anderson, J., Bailey, N., & Alon, I. (2020). Policy, Institutional Fragility, and Chinese Outward Foreign Direct Investment: An Empirical Examination of the Belt and Road Initiative. Journal of International Business Policy, 3(3), 249-272. https://doi.org/10.1057/s42214-020-00056-8

• Journal Article Type: Article
• Acceptance Date: May 12, 2020
• Online Publication Date: Jul 1, 2020
• Publication Date: 2020-09
• Deposit Date: Jun 5, 2020
• Publicly Available Date: Jul 1, 2021
• Journal: Journal of International Business Policy
• Print ISSN: 2522-0691
• Electronic ISSN: 2522-0705
• Publisher: Palgrave Macmillan
• Peer Reviewed: Peer Reviewed
• Volume: 3
• Issue: 3
• Pages: 249-272
• DOI: https://doi.org/10.1057/s42214-020-00056-8
• Public URL: https://durham-repository.worktribe.com/output/1263177