Home Country’s Economic Institutions, Regional Differences And Outward FDI

In21th century, the world economic globalization trend is being strengthenedconstantly. In order to follow the era tide, China proposed a “Go Global” strategy. Ithad not only been successful in attracting foreign direct investment, but also contributedto the rapid development of China’s outward foreign direct investment (OFDI), whichmaking China became one of the main force in the field of global foreign investment.However, China’s OFDI development is unbalance in different regions, appearing aladder decrease among East, West and Central. Currently, China’s OFDI is still at thegovernment leading stage of development, domestic institutional supply has animportant impact on China’s OFDI. But there are differences on the institutional supplyand implementation effect between different regions due to various reasons. Therefore,the main purpose of this paper is to investigate the effect of home country’s institutionson China’s OFDI. Meanwhile, in order to improve the relevance of the study, this papermainly analyzes the impact of regional economic institutions on China’s OFDI.Firstly, this paper analyzes the development status of China’s OFDIin recent years,and discusses the change process and development characteristics of economicinstitutions related to China’s OFDI, in order to explore the relationship betweeneconomic institutions and OFDI from the realistic angle. Secondly, we build atheoretical framework of the effect of home country’s institutions on OFDI withDunning’s Eclectic Theory of International Production, to probe into its impactmechanism and inherent mechanism from the theoretical angle. Finally, this paperfocuses on6influencing factors and empirical tests are carried based on Chineseprovincial panel data from2003to2010. The results of the national sample show thatfinancial marketization degree,“Go Global” strategy, lighten the burden of taxes onenterprises, government governance and the institutions of trade association have asignificant positive impact effect on China’s oversea investment. The results of thedifferent regions sample show that: financial marketization degree has a positive impacton central and western regions; openness is only useful for the western region;“GoGlobal” strategy and lighten the burden of taxes on enterprises play a positive role ineastern and central regions; government governance and the institutions of trade association show a significant positive correlation with OFDI for all regions. In addition,according to the regression coefficients of variables, we can find that the impact effectof these factors are different in different regions.Therefore, it believes that the development of China’s OFDI is affected bydomestic economic institutions, and the impact effect as well as the influence degreehave regional differences. Combined with the current development status of China’sOFDI and the results, this paper argues that our government should promote thesustainable development of OFDI from four aspects: first, continue to increase financialsupport and preferential tax for enterprises; second, implement the “Go Global”strategy in depth; third, exerting governmental function adequately to service OFDI;fourth is to constantly improve the construction of civil society organizations such asthe institutions of trade association.