ABSTRACT
Using an original and unique Chinese manufacturing firm-level data over 2002–2005, this article investigates why firms without productivity advantages could invest abroad. Conducting propensity score matching method, we find strong evidence that government financial support is an important reason underlying this outward foreign direct investment phenomenon.
Acknowledgements
This work was supported by Project of Humanities and Social Sciences of Ministry of Education in China [grant number 17YJC790056]; Shandong Provincial Natural Science Foundation of China [grant number ZR2017BG011]; Qingdao Social Science Planning Fund Program [grant number QDSKL1701008]; China Postdoctoral Science Foundation [grant number 2017M612345]; Fundamental Research Funds for the Central University [grant number 201713012]; and National Social Science Foundation [grant number 17CJL039].
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1 Firms that have already undertaken OFDI before this year would be removed.
2 ATT refers to average treatment effect on the treated.
3 FEM is employed as follows: , where
is unobservable individual effect.
is taken as the residual.