Bilateral Investment Treaty,Host Country Institutional Environment And Chinese Outward Foreign Direct Investment

With the deepening of China's opening-up and the expansion of the scale of OFDI,more and more scholars are paying close attention to the topic of OFDI.However,in the context of the rapid development of China's foreign investment,a considerable part of China's OFDI flows to countries(regions)with low levels of economic development,political instability,serious corruption,and frequent terrorist activities.In the process of direct investment,there are large uncertainties and high investment risks,and it is difficult for overseas investment enterprises to obtain effective policy protection and support from the host country.As we all know,the institutional environment of the host country is difficult for us to decide.Therefore,sign a bilateral investment treaties gradually become investor,especially in developing countries to protect and promote the important means of foreign investment,the hope can to some extent compensate for the lack of host institution,safeguard the legitimate rights and interests of foreign investors.Then,whether the bilateral investment treaties and institutional environment will have an direct impact on China's OFDI,and what role does it have between the two,and whether this influence and effect are different in different economies?This paper uses the data of China's OFDI to 136 countries(regions)in the world from2003 to 2017.From the perspectives of static panel estimation and dynamic panel estimation,this paper studies the effects of bilateral investment treaty and institutional environment on China's OFDI,and then introduces the interaction terms of bit and institutional environment to discuss the interaction between them.At the same time,due to the obvious differences between different economies in terms of institution,this paper also divides the whole sample into developed economies and developing economies to study whether the influence is different in different economies.The research results of this paper show that: first,there is a positive correlation between the bilateral investment treaty and OFDI,that is to say,the bit plays a positive role in promoting China's OFDI location decision.Second,the host country institutional environment is negatively correlated with OFDI,indicating that China's OFDI has the characteristics of "institutional risk preference",that is,its preference flows to thehost country with poor institutional environment.Third,there is a significant substitution relationship between the bilateral investment treaty and the institutional environment,that is,the bit plays a greater and more obvious role in promoting China's investment in host countries with poor institutional environment.This conclusion is applicable to developing economies rather than developed economies.The conclusions of this paper provide theoretical and empirical support for China's OFDI activities,improve the theoretical framework of outward foreign direct investment in developing countries,and provide some reference suggestions for China's OFDI location decision.