Research On The Influence Of Host Country’s Economic Policy Uncertainty On Chinese Enterprises’ OFDI Entry Mode Selection

The current world political situation is turbulent,the economic and trade environment is deteriorating,which seriously affects the development of all countries and increases the downward pressure on the global economy."Black swan" events such as the financial crisis,Brexit,and the covid-19 have also prompted countries to speed up the frequency of policy introduction and transformation.While stimulating the economy,these policies have also made the market environment of various countries more complicated,aggravating the investment and operation of enterprises’ risks and uncertainties.Existing related literature research shows that economic policy uncertainty has a profound impact on the activities of corporate innovation and investment behavior.Foreign direct investment by Chinese enterprises is an important part of economic growth.Good foreign direct investment activities not only bring vigor and vitality to the growth of China’s economic aggregate,but also bring important driving force for China’s economic restructuring and industrial upgrading.The entry mode of foreign direct investment directly affects the quality of investment activities,affects the efficiency of enterprises’ foreign investment and company value,and is related to the success or failure of enterprises’ foreign operations,so it should be paid enough attention.However,at present,the impact of economic policy uncertainty on investment is concentrated on investment behavior itself,and the discussions on economic policy uncertainty and the entry mode of foreign direct investment by enterprises are separate.Therefore,this paper attempts to study the impact of economic policy uncertainty on the choice of Chinese firms’OFDI entry modes.This paper firstly sorts out and summarizes the relevant literature on economic policy uncertainty,the impact of economic policy uncertainty on corporate behavior,the impact of economic policy uncertainty on OFDI,and the entry mode of foreign direct investment,and finds out the existing deficiencies.From this starting point,the research topic of this paper is introduced;in terms of theory,it sorts out the mainstream theoretical viewpoints of the existing foreign direct investment entry mode,and provides a theoretical basis for the subsequent analysis;in the empirical level,this paper uses the 2006-2020 China A-share listing.Enterprises are used as samples to conduct empirical analysis:first,a benchmark regression model is set,and a full-sample regression is performed,then the core explanatory variables are reconstructed,and the Probit measurement method is replaced to conduct robustness tests,and further conduct the analysis by location,nature of ownership,scale,and industry.;Finally,the moderating effect of BIT and host country tariff is tested.The empirical analysis results show that:①The reduction of economic policy uncertainty will prompt enterprises to choose the mode of cross-border M&A in foreign direct investment.②The results of the heterogeneity test show that economic policy uncertainty has a greater impact on non-state-owned enterprises;in terms of regions,economic policy uncertainty has a greater impact on the choice of cross-border M&A modes by enterprises in the eastern region than in the central and western regions;In terms of different industries,the impact of economic policy uncertainty on labor-intensive and capital-intensive enterprises is more significant.③The results of the moderating effect show that my country’s BIT with the host country and host country’s tariff level negatively affect the choice of OFDI entry mode due to economic policy uncertainty.