Journal
JOURNAL OF INTERNATIONAL BUSINESS STUDIES
Volume 39, Issue 3, Pages 337-350Publisher
PALGRAVE MACMILLAN LTD
DOI: 10.1057/palgrave.jibs.8400366
Keywords
outward foreign direct investment; China; macro perspective; corporate ownership structure; capital market distortion; micro firm theory
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Recent economic data reveal that, at the infant stage, China's outward foreign direct investment (FDI) is biased towards tax havens and Southeast Asian countries and are mostly conducted by state-controlled enterprises with government sanctioned monopoly status. Further examination of China's savings rate, corporate ownership structures, and bank-dominated capital allocation suggests that, although a surge in China's outward FDI might be economically sensible, the most active players have incentives to conduct excessive outward FDI while capital constraints limit players that most likely have value-creating FDI opportunities. We then discuss plausible firm-level justifications for China's outward FDI, its importance, and promising avenues for further research.
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