Study On Determinants Of China's Outward Foreign Direct Investment

This paper intends to analyze the determinants of China's foreign direct investment abroad with the aim of putting forward suggestions on promoting China's outward FDI.The purpose of analyzing the determinants of FDI, brought into the framework of domestic macro-economy, is to reveal the relationship and effect between domestic economy and FDI so as to ensure domestic economic target and enhance the regulation and management of FDI. Consequently, suggestions on promoting China's outward FDI are provided accordingly.In this paper, empirical and normative analyses are adopted. The first part of the paper introduces the literature and studies of FDI. Then, the second part presents China's economic development and its background of FDI. The third part presents Dunning's theory of OFDI. His IDP path hypothesis is considered as a proposed explanation of China' scale and pattern of OFDI, albeit at a highly aggregative level, and a modified version of this theory is used to derive sub-hypothesis. This is followed by the first GMM tests on these hypothesized relations. The methodology for hypothesis testing is described, followed by a results section, and finally some conclusions for theory, methodology which incorporate adjustment of policy and management from the perspective of government and enterprises.