The Research On The Outward Foreign Direct Investment And Export Markets Choices Of Firms

With the influence of global financial crisis and the further development of economic globalization,many countries have strengthened trade barriers gradually to protect their economies.The global trade environment is getting worse,and the competition faced by firms is becoming more and more intense.Outward foreign direct investment can effectively avoid trade barriers and other issues and enhance the competitiveness of products,but not all exporters will select outward foreign direct investment.For exporters with outward foreign direct investment,whether outward foreign direct investment will promote the parent company's export?Whether it will increase the probability of exports to the neighbors of the investment destination country?In view of the above questions,this paper analyzes the impact of outward foreign direct investment on the choices of export markets from the perspective of the firm level according to the existing trade theory.The choices of export markets are often affected by export experience,export distance,market size and so on.Based on the matching data of the outward foreign investment firms in China and China Customs Database from year 2003 to 2013,we use the Probit model to examine whether the outward foreign direct investment will affect the choices of export to the neighbors of the investment destination country.The conclusions are as following:First,outward foreign direct investment will increase the probability of exporting to neighbors of the investment destination country in general;Second,the business services of outward foreign direct investment will promote exports to the country near the destination country,while production and sales of outward foreign direct investment in a certain number of years,show the inhibitory effect on the exporters;Third,the outward foreign direct investment of state-owned firms and private firms have significantly promote the export to neighboring countries.The possible marginal contribution of this paper is as following:we add outward foreign direct investment in the analytical framework for export markets choices and consider the impact of outward foreign direct investment on the export markets choices of firms in neighboring countries rather than the investment destination countries,and we also take into account of the impact of import factors on export markets choices.Finally,based on the above research,this paper puts forward the policy suggestions from the angle of the government and firms respectively:the government can provide more accurate and detailed market information and the corresponding preferential investment policies to assist firms to make better decisions to further promote the development of outward foreign direct investment.Firms should collect the information of host country as much as possible before outward foreign direct investment and need to play the role of the different types of outward foreign direct investment.After decision passed,firms should develop appropriate development strategies for different types of outward foreign direct investment to satisfy the needs of different markets.