The Research On The Impact Of Political Risk Of Countries Involved In "One Belt One Road" Strategy On China's OFDI

The strategy of "One Belt and One Road",since fully implemented,has been attracted attention from all over the world,The regional economic integration between China and the countries involved in "One Belt and One Road" strategy get rapidly developed.The investment optimization to the countries involved in "One Belt and One Road" strategy becomes the spotlight for the healthy and orderly development of China's foreign economic cooperation.However,among the 64 countries involved in "One Belt and One Road" strategy,52 countries are developing countries or transition economies,in these countries,the domestic political stability is so poor that you can't expect a sustained and stable investment policy,the high political risk will bring hidden troubles to the Chinese enterprises to carry out investment cooperation.Therefore,it is significantly to study the impact of national political risk on China's direct investment in the countries involved in "One Belt and One Road" strategy.After clarifying the development of the classical investment theory,this paper chooses an appropriate political risk definition and evaluation method.There is a clear description about the current development of China's outward foreign direct investment(OFDI)in the countries involved in "One Belt and One Road" strategy.Based on the former scholars' research,we take the externalities caused by the foreign direct investment(FDI)into consideration and set up a two-country model,based on the domestic production functions and the consumer utility,we discover the dynamic equilibrium conditions among the decision-making of the local government?the consumer welfare and the investment decision of the foreign capital enterprise,which establishes a theoretical analytical framework of the political risk on the FDI.In the empirical analysis,this paper add "the domestic market scale " and "the nation's openness to China" as control variable,to study the influence of political risk on the importance of China's OFDI in the countries involved in "One Belt and One Road" strategy,furthermore,we examined the correlation of 12 political risk index with the OFDI importance respectively.The empirical results show that China's OFDI more inclined to countries involved in "One Belt and One Road" strategy with higher political risk.Among the 12 political risk index,the five risk indicators of“Socioeconomic Conditions”,”Investment Profile ","Law and Order","Ethnic Tensions " and " Bureaucracy Quality " have remarkable effect on China's OFDI.If it extended to confidence level of 10%,then the indicators "Corruption","Religion in Politics "is also remarkable.Based on what discussed above,this paper puts forward some policy suggestions on the OFDI in the countries involved in "One Belt and One Road" strategy.