The Impact Of The Level Of Governance In European Countries On The Location Selection Of OFDI From China

For OFDI enterprises,the policies,economy,culture and geographical factors of the host country will have different degrees of impact on the location selection of OFDI,and the completely different business environment of the host country also has different influence directions on the business decisions of multinational enterprises,among which the governance level of the host country government is an important part of the government behavior in the business environment of the host country,and the level of government governance of the host country also affects the choice of direct investment location of enterprises.The choice of investment location is related to the investment decision and investment behavior of enterprises.Therefore,based on the data of China’s direct investment in European countries from 2005 to 2019,this paper analyzes and studies the impact of government governance level and various sub-indicators on the location selection of China’s outward direct investment in Europe,so as to draw conclusions about the influence of government governance level of European countries at different development levels on the location selection of China’s OFDI.Through the research and analysis of this paper,I found that the overall index of government governance level of European countries has a positive promoting effect on the location selection of the OFDI from China.However,the role of sub-indicators is different: corruption control indicators,discourse power and responsibility indicators,government efficiency indicators,legal degree and regulatory quality indicators significantly positively affect China’s OFDI behavior in empirical tests,while the indicators of regime stability and non-violence do not have a direct impact on China’s direct investment behavior.In the process of removing some samples for robustness test,it is found that countries with higher development levels still meet the assumptions of this paper,the results of the main index GOV are consistent with the model before exclusion,and the sub-indicators are more obvious than the model before exclusion while conforming to the assumption as a whole.Based on the empirical research and analysis results,I provide policy recommendations at the national level and the enterprise level: First,continue to strengthen bilateral trade cooperation with European countries;Second,strengthening country studies on European countries;Third,establish a risk warning mechanism;Fourth,jointly formulate a long-term vision of cooperation with China.