China's economic co-operation related investment: an investigation of its direction and some implications for outward investment

Sumon Bhaumik; Catherine Yap Co

doi:10.1016/j.chieco.2010.09.002

China's economic co-operation related investment: an investigation of its direction and some implications for outward investment

Sumon Bhaumik
, Catherine Yap Co

Economics and International Business

University of Nebraska at Omaha
Michigan State University
IZA

Research output: Contribution to journal › Article › peer-review

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Abstract

Chinese firms undertake large scale contracted projects in a number of countries under the auspices of economic cooperation. While there are suggestions that these activities are an extension of China's soft power aimed at facilitating Chinese foreign direct investment (FDI) in those countries, often for access to natural resources, there is no systematic analysis of this in the literature. In this paper, we examine China's economic cooperation related investment (ECI) over time. Our results suggest that the pattern of investment is indeed explained well by factors that are used in the stylised literature to explain directional patterns of outward FDI. They also demonstrate that the (positive) relationship between Chinese ECI and the recipient countries' natural resource richness is not economically meaningful. Finally, while there is some support for the popular wisdom that China is willing to do business with countries with weak political rights, the evidence suggests that, ceteris paribus, its ECI is more likely to flow to countries with low corruption levels and, by extension, better institutions.

Original language	English
Pages (from-to)	75-87
Number of pages	13
Journal	China Economic Review
Volume	22
Issue number	1
DOIs	https://doi.org/10.1016/j.chieco.2010.09.002
Publication status	Published - Mar 2011

Bibliographical note

NOTICE: this is the author’s version of a work that was accepted for publication in China economic review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Bhaumik, S & Co, CY, 'China's economic co-operation related investment: an investigation of its direction and some implications for outward investment' China economic review, vol. 22, no. 1 (2011) http://dx.doi.org/10.1016/j.chieco.2010.09.002

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SDG 10 Reduced Inequalities

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10.1016/j.chieco.2010.09.002

China’s economic co-operation related investment
NOTICE: this is the author’s version of a work that was accepted for publication in China economic review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Bhaumik, S & Co, CY, 'China's economic co-operation related investment: an investigation of its direction and some implications for outward investment' China economic review, vol. 22, no. 1 (2011) http://dx.doi.org/10.1016/j.chieco.2010.09.002
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title = "China's economic co-operation related investment: an investigation of its direction and some implications for outward investment",

abstract = "Chinese firms undertake large scale contracted projects in a number of countries under the auspices of economic cooperation. While there are suggestions that these activities are an extension of China's soft power aimed at facilitating Chinese foreign direct investment (FDI) in those countries, often for access to natural resources, there is no systematic analysis of this in the literature. In this paper, we examine China's economic cooperation related investment (ECI) over time. Our results suggest that the pattern of investment is indeed explained well by factors that are used in the stylised literature to explain directional patterns of outward FDI. They also demonstrate that the (positive) relationship between Chinese ECI and the recipient countries' natural resource richness is not economically meaningful. Finally, while there is some support for the popular wisdom that China is willing to do business with countries with weak political rights, the evidence suggests that, ceteris paribus, its ECI is more likely to flow to countries with low corruption levels and, by extension, better institutions.",

author = "Sumon Bhaumik and Co, \{Catherine Yap\}",

note = "NOTICE: this is the author{\textquoteright}s version of a work that was accepted for publication in China economic review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Bhaumik, S \& Co, CY, 'China's economic co-operation related investment: an investigation of its direction and some implications for outward investment' China economic review, vol. 22, no. 1 (2011) http://dx.doi.org/10.1016/j.chieco.2010.09.002",

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doi = "10.1016/j.chieco.2010.09.002",

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AU - Co, Catherine Yap

N1 - NOTICE: this is the author’s version of a work that was accepted for publication in China economic review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Bhaumik, S & Co, CY, 'China's economic co-operation related investment: an investigation of its direction and some implications for outward investment' China economic review, vol. 22, no. 1 (2011) http://dx.doi.org/10.1016/j.chieco.2010.09.002

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N2 - Chinese firms undertake large scale contracted projects in a number of countries under the auspices of economic cooperation. While there are suggestions that these activities are an extension of China's soft power aimed at facilitating Chinese foreign direct investment (FDI) in those countries, often for access to natural resources, there is no systematic analysis of this in the literature. In this paper, we examine China's economic cooperation related investment (ECI) over time. Our results suggest that the pattern of investment is indeed explained well by factors that are used in the stylised literature to explain directional patterns of outward FDI. They also demonstrate that the (positive) relationship between Chinese ECI and the recipient countries' natural resource richness is not economically meaningful. Finally, while there is some support for the popular wisdom that China is willing to do business with countries with weak political rights, the evidence suggests that, ceteris paribus, its ECI is more likely to flow to countries with low corruption levels and, by extension, better institutions.

AB - Chinese firms undertake large scale contracted projects in a number of countries under the auspices of economic cooperation. While there are suggestions that these activities are an extension of China's soft power aimed at facilitating Chinese foreign direct investment (FDI) in those countries, often for access to natural resources, there is no systematic analysis of this in the literature. In this paper, we examine China's economic cooperation related investment (ECI) over time. Our results suggest that the pattern of investment is indeed explained well by factors that are used in the stylised literature to explain directional patterns of outward FDI. They also demonstrate that the (positive) relationship between Chinese ECI and the recipient countries' natural resource richness is not economically meaningful. Finally, while there is some support for the popular wisdom that China is willing to do business with countries with weak political rights, the evidence suggests that, ceteris paribus, its ECI is more likely to flow to countries with low corruption levels and, by extension, better institutions.

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China's economic co-operation related investment: an investigation of its direction and some implications for outward investment

Abstract

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