Empirical Test Of The Impact Of Third-country Effects On China's OFDI

Since the 1980s,foreign direct investment(FDI)has grown rapidly throughout the world.This economic phenomenon has attracted wide attention from academia,studying it from the motives of foreign direct investment,the choice of location,the impact on home country and host country.However,the traditional study of foreign direct investment is mainly targeted at developed countries,until some developing economies became important source of foreign direct investment,the outward foreign direct investment of developing countries began to receive the attention of academia.The rise of China's foreign direct investment in the field of international investment makes it necessary to study the location determinants of China's outward foreign direct investment in order to give advice to Chinese multinational enterprises on foreign direct investment activities.However,the traditional research on determinants of the location of international direct investment is mainly based on the model of two countries,namely,the countries of origin and countries which absorb,without taking into account the third-party countries,that is,countries other than the home country and the host country.After expanding the traditional foreign direct investment model of two countries to three countries,there appear complex international direct investment and export-platform international direct investment in addition to vertical international direct investment and horizontal international direct investment,resulting in third-country effects in international direct investment.Third-country effects refers to that the location choice of a country's international direct investment is affected by third-party countries,with the inclusion of third-party countries in the model of international direct investment as a third region in addition to the home country and host country.The reason why third-country effects exist is because that the host country and the third-party countries have a link in production and market,thus affecting the cost of overseas branches and the size of the market.Therefore,in the location choice of international direct investment,multinational enterprises have to not only taking into account the factors of the host country,but also taking into account the factors of third-party countries.As a result,one country's location determinants of international direct investment include the third-party country factors.Because complex international direct investment and export-platform foreign direct investment are new strategies of multinational enterprises of developed countries to optimize the allocation of international direct investment in the context of changing economic globalization,these two are advanced models of international direct investment.And the third-country effects can reflect whether there are these two types of foreign direct investment in a 'country's outward foreign direct investment.That is,whether there is a third-country effects can reflect the maple model and level of China's outward foreign direct investment,so as to give recommendations to China's foreign investment enterprises and foreign investment regulatory organizations.Therefore,this paper uses the method of spatial econometrics with the data of China's outward foreign direct investment from 2006 to 2014 to test whether there is a third-country effects in its location selection,so as to judge the mode and level of China's outward foreign direct investment.The empirical results show that there is no third-country effects in the location choice of China's outward foreign direct investment,and the test results are in line with the expectation of the horizontal international direct investment.