The Theories And Empirical Analysis Of Institution And China's ODI

The status quo of China's ODI, from a macro perspective, China is currently inthe third phase in foreign direct investment cycle theory. The amount of ODI is stillrelatively less, but it is growing particularly fast, the investment location has obviousregional characteristic; ODI has driven by the energy security, transfer of excesscapacity, industry transformation and upgrading (Internal economic factors); Inaddition, ODI has obvious heterogeneity caused by the enterprise internal systemdifference and regional institutional environment heterogeneity; Finally, the ODI hasbeen the strong support from national policy.From the perspective of Home institutional theories, the enterprise systemheterogeneity factor is introduced into theoretical analysis of the choice of ODI andODI's location, expanding the new new trade theory. By the integration of the relatedconcept of institutional theory and new new trade theory, a new mathematical modelwas constructed, the new model on the basis of the enterprises productivityheterogeneity, emphasizes role of the institutional factors in explaining ODI issues inbig developing country(China) in the period of institutional transition. Theoreticalresults show that the heterogeneity of enterprise productivity is still one of the mostimportant factors of influence on its internationalization mode and ODI locationchoice; In addition, the heterogeneity in system of the enterprise also affects theenterprise internationalization model boundary, as well as the enterprise ODIlocation choice boundary. Experience analysis supports the inference conclusion oftheories. Analysis shows that enterprises with close ties to government enjoy arelatively low barrier for ODI.Empirical analysis shows that (1) the enterprise heterogeneity factors havesignificant impact on mode choices of enterprise for internationalization, theproductivity heterogeneity of enterprise has significant impact on it's choice betweenexport and ODI, the enterprises with low productivity service only in the domesticmarket, the enterprises with higher productivity through export services in theinternational market, the enterprises with highest productivity through ODI servicein the foreign markets; In addition, the heterogeneity of enterprise system,relationship between enterprises and government, significantly affect the choice ofenterprises for export, the enterprises are more close to government, they are morelikely to export, but the influence of heterogeneity in enterprise system on it's ODIchoice is not significant.(2) the enterprise heterogeneity factors significantly alsoimpact on the location choice of it's ODI, heterogeneity in productivitiessignificantly affect it's ODI location choices, the enterprises with high productivitychoose to investment in the developing countries, the enterprises with moreproductivity choose to investment in the developed countries, the enterprises withhighest productivity choose to investment both countries at the same time;Heterogeneity of enterprise system, degree in relationship between the enterprisesand government significantly affect the location choices of the enterprise for ODI,the enterprises are more close with government, they can enjoy some ‘dividends'from institution, so they acquire some enterprise comparative advantage on ODI,compared with other enterprises, these enterprises ODI may enjoy relatively low threshold, Whether ODI for developing countries or ODI for developed countries orODI for both developing countries and developed countries are more successful, ifthe enterprise are more close with government, the institutional heterogeneity factorsof the enterprise changed the border of enterprises in ODI location choicesIn addition, in view of the motherland regional institutional environmentdifference markedly, by analysis from the perspective of contract theory and so on,the institutional environment may become a comparative advantage of localenterprises. Empirical analysis confirmed that the institution of regional environmentsignificantly affected the enterprise internationalization mode choice, and ODIlocation choice. The improvement of the institution of regional environmentsignificantly promotes local enterprises to export or ODI; the improvement of theinstitution of regional environment significantly promotes local companies to investin developed countries. In control of a lot of influential factors from the new tradetheory, new trade theory, we use an index for the rule of law, an index for the districtproperty protection, an index for regional protection of the rights and interests ofowners as the proxy variables for regional institutional differences, to explore theinfluence of regional legal institutional differences on mode choice ofinternationalization and on choice of ODI location for the microscopic enterpriseslocate in these regions, the results shows that (1) regional legal environment hassignificant positive influence on both export choice and ODI choice for enterpriseslocate in these regions, improvement in regional legal environment promote localenterprises to export and outward direct investment, the regional environment is acomparative advantage for local enterprises, and significantly affect theinternationalization mode of the enterprises;(2) regional legal environment hassignificant influence on choice of ODI location for enterprises locate in these regions,improvement in regional legal environment promote local enterprises to investmentin developed countries.In addition to heterogeneity of the enterprise internal system, and home interiorregion institutional differences, finally, the paper analyzes the impact of theinstitutional factors in the host country (distance) on the Chinese enterpriseinvestment decision and the investment location choice. The empirical results showthat in general, the host countries with better institutional environment are morelikely to attract investment from Chinese companies, but there are differences in theresults of the different host system indicators.In control of a lot of influential factors from the new trade theory, new tradetheory, we respectively use comprehensive economic environment index, propertyrights index, administrative corruption perceptions index, financial freedom index,government spending index, business freedom index, monetary freedom index,labour freedom index, trade freedom index, investment freedom index, financialfreedom index as the proxy variables for economic institutional factors of hostcountries's, to explore the influence of these host countries's economic institutionalfactors on mode choice of internationalization and on choice of ODI location for theenterprises in China, the results shows that (1) relative to export, the host countrymore attract Chinese enterprises ODI, if the economic institutional environment ofthese countries are more mature, we use a variety of economic institutional measure to empirical analysis, the results are steady.(2) In general, whether improvement ineconomic institutional environment for the developing countries or developedcountries is more attracted ODI from Chinese enterprises ODI, the improvement indeveloped countries is more attractive in ODI than in developing countries.According to the theory and empirical analysis results of this paper, wecarefully put forward the following Suggestions:(1) to accelerating reform of thestate-owned enterprise internal system, we need to gradually weaken or eliminate itsrelative "super national" advantage, need more policy to supporting the privateenterprises gradually, we use the institutional structure to ensure each individualfirms to have relatively fair environment;(2) to accelerating the construction ofinfrastructure in some regions, at the same time, through communication, training,guidance, supervision, we accelerate the regional soft institutional environmentconstruction for the relief on the difference between areas;(3) to speeding up theeconomic system transformation, and speed up the transformation of governmentfunctions and stripping double identity of the government in the economic system,because of that the system architecture of State and functions of the governmentinfluence the individual economy and comprehensive economic efficiency, we needto strengthen the system construction of impersonalization, to strengthen theauthority of the legal system of norms for the solution of the economic problemsaccording to the contract spirit, rather than personality or relational factors, and thenthe economic performance improved; we need to standardizing the governmentintervention in the economy, to strengthen the government's service function, theadministration according to law, and the democracy of administrative supervision.