The Effect Of Institution Quality Of Host Countries On China's Outward Foreign Direct Investment

China's outward foreign direct investment in the countries along “The Belt and Road” has made a good beginning in the background of "The Belt and Road" strategy.However,there has been an academic debate on the theory of “institutional promotion”,“institutional obstruction” and “institutional independence” about the relationship between the host country's institution quality and the sovereign state's outward foreign direct investment.So,what was the effect of the host country's institution quality on China's outward foreign direct investment in the countries along “The Belt and Road”? Firstly,the paper evaluated the institution qualities of the countries along "The Belt and Road" from three dimensions: the degree of corruption,the level of political risk and the level of the rule of law,and described the characteristics of China's outward foreign direct investment.It is found that: these countries are the regions with high possibilities of corruptions and political risks,and also with low legal governance degrees.That is to say,institution quality is low and institution risk is high in the countries along “The Belt and Road”.But China's outward foreign direct investment shows a generally significant growth trend in the countries along “The Belt and Road”.At the same time,it is also found that every region's institution and investment vary from others along “The Belt and Road”.Secondly,basing on the theory of rent seeking,property right and transaction cost in the theory of institutional economics,this paper believed that the corruption mostly played "lubricating effect" on the China's outward foreign direct investment in the countries with higher corruption;China's outward foreign direct investment was more likely to show the relative competitive advantages in the countries of higher political risk;The rule of law played more negative effects on the China's outward foreign direct investment rather than positive effects.As a result,China's outward foreign direct investment was apt to flow to the countries of the high degree of corruption,high political risk and the relatively low rule of law,and showed that it didn't dare to flow to the countries of the high institution risk.Thirdly,this paper examined the effect of host country's institution quality on China's outward foreign direct investment from three dimensions: the degree of corruption,the level of political risk and the level of the rule of law from 2004 to 2013,based on theoretical analysis and hypotheses.It is found that theinstitution quality of the host country had a negative effect on China's outward foreign direct investment from the view of corruption,political risk or the rule of law.In other words,the higher the host country's institution quality,the less China's outward foreign direct investment.In addition,the size of the market of the host country,the opening degree of FDI and protection degree of the bilateral trade and investment all had relatively significant positive effects on the China's outward foreign direct investment.But the geographical distance between China and the countries along “the Belt and Road” hindered and had a significant negative effect on the China's outward foreign direct investment.Therefore,the conclusion of this study supported the theory of “institutional obstruction” effectively,and provided a new empirical evidence for the debate on the relationship between the host country's institution quality and the sovereign state's outward foreign direct investment.Finally,basing on the theoretical analysis,empirical test,research results and related explanations,the paper put forward the corresponding enlightenment about China's outward foreign direct investment in the countries along “The Belt and Road” from the four aspects of the dynamic choice path on the institution preference,the development strategy of "win-win cooperation",the stability and continuity of investment and the key investment areas.I do hope it can contribute to China's outward foreign direct investment and the bilateral economic development between China and the countries along “the Belt and Road”.