Exploring the potential determinants of Chinese OFDI towards OBOR nations: an application of gravity model

ABSTRACT

This paper attempts to scrutinize the impact of natural resources, cultural, geographical, and institutional factors on Chinese OFDI toward OBOR signatories by using the Gravity model. The empirical estimates validated a significant positive relationship between China’s and OBOR Partners’ GDP, and the negative influence of geographical distance on Chinese OFDI. Institutional factors (government effectiveness, corruption control, rule of law, voice and accountability, regularity quality) have significant negative, while cultural factors (shared border, common language) have significant positive effect on Chinese OFDI. Also, current findings disclose that the host economy’s natural resources act as key driver for Chinese OFDI in OBOR.

KEYWORDS:

• Policy and non-policy factors
• Chinese OFDI
• OBOR
• gravity model

Disclosure statement

No potential conflict of interest was reported by the authors.

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Notes

1. https://stats.idre.ucla.edu/other/mult-pkg/introduction-to-generalized-linear-mixed-models/

2. https://newonlinecourses.science.psu.edu/stat504/node/216/