Impact of Institutional Distance and Cultural Distance on China’s OFDI in BRI Countries
DOI:
https://doi.org/10.18034/gdeb.v13i1.777Keywords:
Outward Foreign Direct Investment, Institutional Distance, Cultural Distance, China, Belt and Road CountriesAbstract
This research delves into the complex dynamics influencing China's Outward Foreign Direct Investment (OFDI) within the Belt and Road Initiative (BRI) framework, focusing on the role of institutional and cultural factors. The BRI, a massive global infrastructure and economic development project initiated by China, has attracted significant scholarly and policy attention due to its potential implications for international financial governance and development. The research aims to contribute to the academic understanding of China's investment behavior within the BRI by analyzing the impact of institutional and cultural distance on OFDI patterns. By utilizing panel data from nearly 50 BRI nations and employing analytical techniques, the research sheds light on how these factors shape China's investment decisions from 2011 to 2020. The research suggests that institutional distance promotes China's OFDI to BRI nations, whereas cultural distance is a deterrent. Differences in formal rules and regulations between China and BRI countries tend to encourage investment, while differences in cultural norms and practices hinder it. Moreover, the research highlights that cultural differences have a more substantial negative impact on investment than institutional disparities. Regarding policy implications, the research suggests that efforts to reduce cultural barriers and enhance cross-cultural understanding could facilitate more excellent Investment from China within the BRI countries.
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