A Reaearch For Effect Of Institutional Factors On Location Distribution Of OFDI In China

When the strategy of "going out" began in 2002,the scale and structure of Chinese foreign direct investment presented distinctively geographical features. Analysis of locations of foreign direct investment is helpful to confirm the mode and the main determinants of foreign direct investment. However, the existing theory for Chinese foreign direct investment is still not enough. Although multinational company theory analyzes the motives for foreign direct investment and decision factors, there remains the lack of basic economics analysis a disconnection with reality. So this paper, based on the traditional theory of foreign direct investment and combined with the theory of newly institutional economics, carried the theoretical analysis and empirical analysis on Chinese foreign direct investment location and obtained the results. Finally the Suggestions of development of the strategy of "going out" policy are put forward.First of all, in this paper, both domestic and abroad research about the institutional factors of location of foreign direct investment has been reviewed and summarized. These studies can be divided into the basic theory of foreign direct investment, the macro and micro factors that affect the OFDI and the institutional factors that affect the OFDI respectively. And the influence of institutional factors mainly include the institutions of the host-country, home-country and institutional distance. After the literature review, this paper analyzes the status of Chinese foreign direct investment in 2003-2014. In recent years, it can be found that China's OFDI presents the total amount increasing year by year and the regional distribution unbalanced. Also the main problems in the development of China's foreign direct investment is pointed out.Second, in this paper, the genesis and location of OFDI is analyzed from the perspective of traditional economics. And the impact of host-country and home-country institutional factors are screened out based on three basic theories of institutional economics. After the detailed theoretically analysis, this article, in view of the home country and host country respectively, uses time series model and panel data model including the political, legal, economic, and the informal institutional distance variable to carry the empirical test on Chinese foreign direct investment stock data from 1996 to 2014.Finally, through the above theoretical and empirical analysis, this paper reached a conclusion that there exists escape effect in Chinese foreign direct investment on the institutions of the home country. As well as to the host country, different effect has produced in political, legal, economic, and informal institutional distance. On this basis, the corresponding policy recommendations in Chinese outward foreign direct investment are put forward respectively from the micro level of enterprises and the macro level of government in this paper.