How Digital Economy Affect Outwards Foreign Direict Investment

With the development of data science and data technologies,we are stepping into an economy driven by data.Countries around the world are promoting digital economy by encouraging data enterprises’ business and traditional enterprises’ digital transformation.Outwards foreign direct investment(OFDI),an classical method that enterprises use for allocating resources in various countries to pursue profit,gain development in long-term,meanwhile,enterprises’ growth promote country’s economy.In recent 5 years,there are decline hints of OFDI,especially for rather advanced countries.So,what does a country’s digital economy development have impact on its OFDI?Firstly,the paper evaluated 42 sample countries digital economy degree from 2010 to 2017 through principal component analysis,based on evaluation system in previous studies.Secondly,the basic empirical analysis proved the robustness and reliability of the positive relationships between OFDI flow and digital economy degree,considering the issues of endogeneity,heterogeneity,statistical norms,robustness test such as endogeneity test,Heckman test,substitution variable test and grouping test.Thirdly,stepwise regression method and bootstrap test are used to further explore the influence of a country’s digital economy development level on OFDI.The empirical result shows that there is a positive correlation between the development level of a country’s digital economy and OFDI.The result indicates that developing the Silk Road in digital area and improving the development level of digital economy of countries in the Belt and Road region can promote investment communication between countries,which is significant to achieve the goal of connectivity.The results of grouping test show that the promotion effect of digital economy development level on OFDI exists heterogeneity among different kind of countries,and the promotion effect of digital economy development on OFDI is greater in countries with medium and low human development level.In intermediary analysis,we find that the promotion effect of digital economy development can be realized through two paths: reducing financing cost of OFDI and improving production capacity.Therefore,the support of digital infrastructure construction to partial backward countries and the exploration on digital economy development rules with countries with high human development level can promote the overall production capacity,which is also conducive to increase financing channels and reduce the cost of financing,thus increasing cooperation objects the size of the foreign direct investment,promote the connectivity.