Research On The Influence Of Home Country System On OFDI

OFDI(outward foreign direct investment)was once a unique economic phenomenon of multinational enterprises in advanced economies.Traditional international investment theories also use OFDI as a research object to achieve a great result and form a relatively complete theoretical system.However,China's OFDI is growing geometrically in recent years.Under the influence of global financial crisis,China's foreign direct investment shows rise against the trend,even if the scale of global capital flows continues to decline.In 2016,China first became the world's second largest foreign investor.It was shown that the maximization of benefits in traditional OFDI theory cannot be used to explain the development track Chinese Enterprises “Going Global”.Obviously,lacking of international experiences,independent brands and technologies,Chinese enterprises stay in China for further development can be seen as the wise choice under the trend of economic rapid growth.Also,it can not to make reasonable explanation of the behavior of Chinese enterprises OFDI from the Microscopic view in traditional theories.For one thing,the developed countries' home system can be regarded as the basic “background”.Since developed economies hold a high-quality domestic system and a superior business environment,enterprises has no worries on the system cost and government rent-seeking to develop the cross-border investment.However,the system construction of emerging economies represented by China lags behind,and these countries have a high government intervention in general.Especially in transition period,it pays more attentions of Chinese enterprises' OFDI income on macroscopic economy benefits,while the microcosmic interest of enterprises is paid less.As a result,the behavior of Chinese enterprises' OFDI is to be affected by regional policy,local governance and international bilateral relation.Based on the above discussion,this paper will attempt to explore the following core issues: In the field of international investment,what kinds of dimensions the home country system involved? What is the relationship between these dimensions? If all of them could have a significant impact on OFDI? If the home country system can be combined with the resource view and location view of the classical OFDI theory? Finally,based on the characteristics of China's vast territory and vast territory,great differences in the evolution of interregional institutional system,high level and wide range of local government regulation and control,various types of foreign(investment)agreements and frequent contracting,Is there a significant spatial correlation between the quality of regional institutions and the choice of OFDI by enterprises?Overall,this study will do research on four aspects below:(1)It evaluates the effectiveness of the impact of home county system on Chinese enterprises OFDI on the basis of current international investment theory,research and historical Chinese foreign investment changes.(2)This paper analyzes the theoretical nature and framework of the home country system based on the classic theories including new institutional economics and constructs the OFDI-S model which is embedded in the home country system based on revising the OLI pradigm.(3)Taking the policy of OFDI of listed companies from 2003 to 2015 as a sample,this paper tests the direct influence and regulatory effect of home country system on the internationalization of Chinese enterprises.(4)This paper provides suggestions on policies for the Chinese government to improve regional OFDI.This paper conclusion are as followed:(1)The home country system is divided into three dimensions: domestic level(institutional environment,government governance)and international level(foreign-related system)where is the third one? At the domestic level: the optimization of the tax structure,the reform of the credit system,the maturity of the technology market,the improvement of intellectual property rights,the reduction of the government intervention,the increase of subsidies,the efficient examination and approval process,and the reduction of the corruption can dramatically stimulate the oversease investment of Chinese enterprises.It reflects the “crowding in” effect on OFDI.On the other hand,the strength of property protection is enhanced,the contract mechanism is effectively implemented,and the scale of government expenditure is increased,the high-quality supply of public goods can inhibit the “going out” of Chinese enterprises.It presents the “crowding out” effect on OFDI.On the international level,the Double Taxation Avoidance System and bilateral investment agreements are mostly signed as capital inflow countries,and Chinese enterprises cannot get treatment of high standards from contracting countries in the process of “going out”.Therefore,the two types of agreements cannot promote Chinese enterprises OFDI.It even avoids the “crowding out” effect of double taxation system on OFDI.On the contrary,free trade agreements and overseas economic and the trade cooperation zones invest(investment? Or just delete it?)in OFDI investment protection and investment incentives are more inclusive,more open,more extensive,and can nurture more practical terms.The effect of encouraging Chinese enterprises to invest in contracting countries is better.(2)The home country system can also indirectly affect the choice of OFDI due to the enterprise ownership(or location advantage of host country).At the domestic level: the improvement of property right system,contract system,credit system,technology trading market and intellectual property system,as well as the reduction of government interference,the increase of subsidy scale and the decrease of rent-seeking behavior can innovate Chinese enterprises a higher level of technology ownership advantage,showing the characteristics of “strengthening” technology ownership advantage of the home country system.However,the reduction of the corporate tax rate and the increasing supply of public goods,enterprises with more R&D investment tend to stay in China for development,showing the characteristics of “weakening” the willingness of innovative enterprises to OFDI in the home country system.(Make it a sentence please)International level: the foreign-related system can optimize legal quality and business environment of the host country(such as bilateral investment agreements and free trade agreements),reduce the heavy tax burden of the host country and infrastructure's inhibition effect on the inflow of Chinese capital(such as overseas economic and trade cooperation zones),encourage Chinese Enterprises to enter the contracting country OFDI where the institutional location advantage is missing,and present the “strengthened” east of the foreign-related system.(3)From “two co-ordination” to “three co-ordination” is a major innovation of Chinese government's strategic thinking of accelerating the level of opening up to the world.At the domestic level,the institutional environment is the most stable system core of the home country system.It is a static framework,which requires the government to build an implementation mechanism to adapt to it,so as to present its advantages.This paper examines the effect of the 12 sub-systems of the domestic system on the micro level.The differences of the impacts of OFDI on characteristic heterogeneous enterprises can help local governments to re-examine the method Chinese enterprises use to show their “heterogeneous preference” for domestic systems in OFDI decision-making,and precisely encourage target enterprises to “go globally”;at the international level,it is necessary for China to study and learn from international economic rules to adjust domestic systems,and thus to provide a good domestic environment for Chinese enterprises to cultivate the ability of “go globally”.It also requires the government to adjust the domestic system and policy tools,cooperate with the efficiency and effectiveness of foreign(investment)system,and strive for greater institutional power in the field of international investment.This paper examines the “heterogeneity preference” of OFDI from Chinese enterprises to the contracting states that have signed different foreign-related(investment)systems.The conclusions can help China to better achieve the “overall planning of international and domestic rules” in the process of participating in international economic activities.The main contributions of this paper are as follows: firstly,from the perspective of home country system,the study of OFDI is to establish a theoretical framework with stronger explanatory power for the emerging economies represented by China.Secondly,this paper combines the home country system with the “OL” advantage in the eclectic theory of international production,enriches and develops the theory of international investment.Thirdly,the research of this paper will have great practical value for China,which will start from the two paths of internalization of international rules and internationalization of domestic rules,and promote the reform of existing governance mechanism and rule system.