Research On The Impact Of Institutional Distance On China’s Foreign Direct Investment

Since President Xi Jinping proposed the "One Belt and One Road" initiative,the Chinese government has actively introduced relevant policies to promote cooperation with countries along the "One Belt and One Road",and the proportion of foreign direct investment in the countries along the "One Belt and One Road" is high.These represent China’s continuous increase in exchanges with countries along the "One Belt and One Road" and efforts to link economic and trade relations along the "Belt and Road" countries.With the continuous expansion of China’s foreign direct investment,more and more scholars have jumped out of traditional influence factors such as market size,geographical distance,and openness.More and more scholars have studied the institutional distance factors.This paper studies the impact of institutional distance on China’s foreign direct investment by selecting the political system distance,economic system distance,cultural system distance,and foreign direct investment data of China along the "Belt and Road" between 2007 and 2015.Finally,sum up the reasons and propose corresponding countermeasures.This paper mainly divides the institutional distance into three parts.By combining the relevant data of the countries along the "One Belt and One Road",the market size of the invested country,the per capita wage cost of the invested country,the scientific and technological level of the invested country,and investment.The seven factors of the bilateral exchange rate between the two countries and the countries to be invested,the bilateral trade volume between the two countries,the geographical distance between the countries,and the degree of openness of the investee countries as the controlling variables affecting foreign direct investment,through the construction of an expansion The gravity model adds relevant control variables to study how institutional distance affects China’s OFDI.From the fourth chapter below,we can get the following conclusions:(1)The distance between economic system and political system can promote China’s foreign direct investment.(2)The cultural system distance has a hindrance to China’s foreign direct investment.(3)China’s foreign direct investment will not only be affected by institutional distance,but also by traditional factors such as per capita wage costs,geographical distance,bilateral trade volume,and national openness.Therefore,we need to conduct a comprehensive analysis of the reasons that affect China’s foreign direct investment.The "One Belt and One Road" initiative has an important strategic position in China.China needs to carefully analyze the factors affecting China’s foreign direct investment and play a good role in the economic pull of countries along the "One Belt and One Road".Finally,based on the empirical results obtained in this paper,this paper proposes a series of corresponding policy recommendations to promote the development of China’s foreign direct investment.