Assessing the Scale and Potential of Chinese Investment Overseas: An Econometric Approach

16 Pages Posted: 3 Aug 2011

See all articles by Shiro Patrick Armstrong

Shiro Patrick Armstrong

Australian National University (ANU) - Crawford School of Public Policy

Date Written: July‐August 2011

Abstract

The recent rise in Chinese outward direct investment (ODI) has significant global implications and impacts on host country policy. The present paper attempts to provide a theoretical basis and to define a robust econometric approach to assess the performance and potential of Chinese ODI. In this paper, foreign direct investment (FDI) performance is estimated using a frontier FDI model to measure how foreign investors, especially China, and the recipients of this direct investment perform relative to a benchmark of potential FDI. The results show that Chinese ODI achieves less of its potential compared with other investors. However, its ODI to Australia has performed much better than investment to other destinations. The results suggest that Chinese policy‐makers should look at the pattern of China's ODI and, in light of superior performance in destinations like Australia, adjust policy strategies and institutional arrangements to enhance performance and reduce barriers to Chinese ODI.

Keywords: Chinese investment, foreign direct investment, spatial linkage

JEL Classification: F21, F23, F50

Suggested Citation

Armstrong, Shiro Patrick, Assessing the Scale and Potential of Chinese Investment Overseas: An Econometric Approach (July‐August 2011). China & World Economy, Vol. 19, Issue 4, pp. 22-37, 2011, Available at SSRN: https://ssrn.com/abstract=1904171 or http://dx.doi.org/10.1111/j.1749-124X.2011.01248.x

Shiro Patrick Armstrong (Contact Author)

Australian National University (ANU) - Crawford School of Public Policy ( email )

ANU College of Asia and the Pacific
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia

HOME PAGE: http://www.crawford.anu.edu.au/staff/sarmstrong.php

Do you want regular updates from SSRN on Twitter?

Paper statistics

Downloads
2
Abstract Views
494
PlumX Metrics