The Impact Of Government Governance Capacity In OECD Countries On China’s OFDI Location Choice

The OECD countries are generally characterized by relatively steady economic growth rates,advanced science and technology and a sound legal system,which are in line with the general direction of China’s OFDI destination selection and remain the preferred destination for China’s OFDI.However,in recent years,OECD countries such as the United States,the United Kingdom and Australia have begun to politicize international economic relations on the grounds of national security and restrict China’s OFDI through government intervention,in an attempt to hinder China’s normal outbound investment activities.Therefore,in addition to the impact of key economic factors on OFDI,China’s current and future enterprises going abroad for direct investment should also consider the impact of non-economic factors such as government governance on investment,especially the stability of the local government,government efficiency,government corruption,legal system protection and the degree of democratization.In particular,it is important to examine the impact of local government stability,government efficiency,government corruption,legal system security,degree of democratization and other indicators of government governance capacity on the choice of investment destination.It is against this background that this thesis selects government governance capacity indicators of OECD countries or some of the more developed economies as important variables to analyse their impact on the choice of OFDI destinations for Chinese enterprises,providing an important reference for Chinese enterprises in their choice of OFDI target countries.By analyzing the impact of government governance capacity in OECD and other countries on China’s investment in OECD countries,this thesis is conducive to improving the overall layout of China’s OFDI to OECD countries and avoiding the investment risks caused by government governance capacity indicators.The full research idea is as follows: Firstly,we discuss the influence of host country institutional factors and host country government factors on China’s OFDI location choice;then,according to previous studies,we divide China’s OFDI into China’s investment in countries along the "Belt and Road" and China’s direct investment in OECD countries by investment region.Since different investment motives also affect the choice of international investment location,this thesis focuses on the impact of government governance capacity variables on China’s OFDI destination choice,assuming some economic factors remain unchanged;secondly,based on the general international economic environment,this thesis divides OECD countries into four categories according to continents,and then selects representative countries from each continent for analysis,and then compares.Finally,in the empirical part,the host government governance capacity is taken as the core explanatory variable,and then the core variable government governance capacity is refined into six indicators to build an empirical model and analyse how each indicator affects the investment behaviour of Chinese enterprises in OECD countries as well as the effectiveness and path of the impact one by one,providing an important reference for decision making in the formulation and implementation of overseas investment policies for Chinese enterprises.The findings of this thesis show that:(1)China’s OFDI is generally more biased towards investing in OECD countries with better government governance,and the main location of investment focus is chosen in Denmark,Sweden,the Netherlands,Canada,Australia,Germany and other countries with better government governance.(2)China’s outbound investment is more biased towards OECD countries with high democratic discourse,high government efficiency and poor corruption control.The focus should be on countries with high discourse such as Canada,Norway and Denmark,and countries with high efficiency such as Germany,Australia,the Netherlands and Japan.In addition,government corruption has objectively diverted some Chinese capital,and Chinese OFDI should be wary of OECD countries such as Greece and Mexico,which have poor corruption control in the future.(3)For developed OECD countries,Chinese OFDI should focus on the host country’s capacity to control corruption,while for non-developed OECD countries,stability of local government is particularly important,and the maintenance and strengthening of government stability is conducive to attracting foreign capital.Based on this,some important countermeasures are proposed in this thesis: China should do a good job of assessing the governance capacity of OECD countries and open up information channels to enterprises.Establish an early warning system for China’s outward FDI to OECD countries and improve the efficiency of central and local government services.Enhance the environmental adaptability of China’s outbound investment enterprises to countries with low corruption control capacity.Formulate and implement strategies for investment differentiation and relative balance in total investment to mitigate investment risks.Improve investment promotion management practices for investments to OECD countries with large markets.