Comparing the Determinants of Outward Investment from China and the United States

The People’s Republic of China can become an important and influential player in the world through its overseas investment to developing countries. This paper examines and compares the determinants of Chinese and U.S. direct investment around the world. We adopt the cross sectional analysis for the year 2005 and 2006. The basic as well as the improved Sala-i-Martin extreme bound analysis are applied to search for robust determinants. The result suggests that distance, infrastructure facilities and energy reserves are important factors to attract investment from China and U.S. Moreover, institutional factors are not robust determinants for China’s outward direct investment, suggesting that Chinese investors do not pay enough attention to institutional risks in their investment.

Keywords: Outward investment, China, US

JEL Classification: O10

Suggested Citation: Suggested Citation

Dong, Yan and Li, Kui-Wai and Zhang, Dayong, Comparing the Determinants of Outward Investment from China and the United States (March 1, 2011). The Chinese Economy, Vol. 44, No., 2, March 2011: 58-77, Available at SSRN: https://ssrn.com/abstract=2690712