Chinese Outward Foreign Direct Investment and Innovation in Host Countries: Evidence from Countries Along the Belt and Road. (May 2023)

• Record Type: Journal Article
• Authors: Sun, Yanyan; Fan, Sha
• Is Part Of: Global journal of emerging market economies. Volume 15:Number 2(2023)
• Page Start: 234
• Page End: 253
• Publication Date: 2023-05
• Subjects: Belt and Road Initiative (BRI) -- foreign direct investment -- innovation capacity -- countries along the Belt and Road; Investments, Foreign -- Periodicals; Economic development -- Periodicals; Developing countries -- Economic conditions -- Periodicals; Developing countries -- Social conditions -- Periodicals; Developing countries -- Politics and government -- Periodicals; 330.9172405
• DOI: 10.1177/09749101231167356
• Languages: English
• ISSNs: 0974-9101

Abstract

Foreign direct investment (FDI) can benefit innovation activity in host countries through spillover channels, such as reverse engineering, demonstration effects, and supplier–customer relationships. Using data from 26 countries along the Belt and Road route (BRCs) and 32 non-BRCs, we identified positive causal effects of the Chinese outward FDI on the innovation capacities in technology-intensive industries of both BRCs and non-BRCs. However, this effect varies depending on the host countries' economic development levels. The impact of Chinese OFDI on the general innovation performance in host countries is absent. Meanwhile, the implementation of the BRI has on the whole, a negative impact on BRCs' innovation performance.