A Study On The Impact Of Formal Institutional Distance On China’s Contracting Foreign Projects In Countries Along "the Belt And Road"

In the new era,the new development paradigm featuring dual circulation,in which domestic and overseas markets reinforce each other,with the domestic market as the mainstay is an important goal in promoting China’s economy to achieve high-quality development.On the one hand,as an important means of foreign economic cooperation,the high-quality development of contracting foreign projects is conducive to It is conducive to promoting the construction of "The Belt and Road" and injecting inexhaustible impetus for building a new pattern of double circulation.On the other hand,the construction of "The Belt and Road" provides a new development market and a new development direction for contracting foreign projects.Firstly,most of the countries along "The Belt and Road" are emerging economies and developing countries,and their infrastructure construction fields are still at an early stage of development,with a large potential for the development of the engineering contracting market.Secondly,with the gradual implementation of the "The Belt and Road Initiatives",the corresponding financial institutions can provide financial support for China’s contracting foreign projects,such as the Asian Infrastructure Investment Bank and the Silk Road Fund."But there are opportunities and challenges,"The Belt and Road"covers 64 countries in three continents,Asia,Europe and Africa.As each country has different national conditions,there are also differences in the system,and the formal institutional distance between the two countries will certainly have an important impact on China’s contracting foreign projects.There are significant differences in the institutional environment between countries and such differences can have an important impact on our contracting projects.Given the above background,Author collected 2007-2019 data on China’s contracting foreign projects to 52 countries along "The Belt and Road",applied SPSS and Stata 16.0,constructed a corresponding country panel model based on theoretical analysis to focus on the measurement of formal institutional distance and its impact on contracting foreign projects.The research results show that:(1)formal institutional distance has a significant negative impact on contracting foreign projects,among which,political and economic institutional distance show a significant negative impact,while the impact of legal institutional distance is not significant.(2)"The Belt and Road" and bilateral investment agreements can reduce the disincentive effect of formal institutional distance on contracting foreign projects.(3)Formal institutional distance affects contracting foreign projects through bilateral trade costs.Finally,based on the above research findings,this paper proposes relevant countermeasures.The government needs to strengthen top-level design as well as planning guidance,and do a good job of aligning development strategies.Building and improving matchmaking platforms and providing policy support.Conduct multi-level and all-round communication and consultation to promote the comprehensive development of bilateral relations.Enterprises need to strengthen research,objectively assess the institutional environment of the host country,fully understand the current institutional quality of the host country and the distance from China’s formal system,and at the same time,use the bilateral investment agreements to provide security for your own development.