Article Preview
Top1. Introduction
With the continuous advancement of the Belt and Road initiative (BRI), China has deeply promoted economic cooperation with countries along the route, in which Outward Foreign Direct Investment is one of the a key areas. China’s OFDI on the countries along the route is not only the requirement of sustainable development for China, but also an important way of realizing leap-forward development for countries along the route. Statistics show that China’s OFDI flow was US$143.04 billion in 2018, falling of 9.6% than last year, which still ranked second in the world. And the direct investment flow to countries along the route was US$17.89 billion, accounting for 12.5% of the total. It turns out that the countries along the route have become a new growth point for China’s OFDI. In the meantime, the initiative promotes a strategic cooperation between countries and regions and forms a circle of beneficial and co-prosperity. This conforms to the demand of host country (Ch. Pan, 2017) and promotes the high-quality cooperation and development between China and countries along the route. However, China’s investment-related cooperation with these countries has been frequently questioned by some western media (Qiao, 2019), and voices like “China threat theory” and “Chinese predation theory” result in a phenomenon “buzz at home but fuss from the international community” during the construction of “the Belt and Road” (Ja and Lei, 2019). Furthermore, some even questioned that China’s OFDI comes from its geo-expansion strategy (Robert D, 2016). To sum up, such misunderstandings and doubts emerge from the uncertainty whether China’s OFDI is conducive to the development of countries along the route, or whether the construction achievements can be shared. In this context, this paper is of practical significance to guide the effects of China’s OFDI on the host countries’ technological progress, provides strong support for the high quality development of “the Belt and Road”, forms correct public opinions, eliminates the doubts from the countries along the route, increases their participation, and promotes the positive technology spillover effect of China’s OFDI.
This study focuses on the impact of China’s OFDI on the technological progress of countries along the route based on a balanced data of 41 countries from 2003 to 2019. Due to the large quantity of countries along the route, and most of them are transitional and developing countries except for a few developed ones, these countries may have different demands for FDI. Considering the lag effect of OFDI when it plays an effective role, by building a dynamic panel threshold model, we mainly tested the threshold effect of OFDI on the technological progress of host country from different country types and the different time periods proposed by the Belt and Road initiative, which is of great significance of dispelling doubts, improving the participation enthusiasm and promoting the smooth implementation of the BRI. This is conducive to establish a correct direction of world public opinion, enhance the enthusiasm of countries to participate in the construction of the Belt and Road, and provide an important experience support for the investment cooperation between China and countries along the route, so as to further promote the smooth implementation of the Belt and Road has important practical significance.
This paper is structured as follows: Second 2 describes the literature review; Section 3 introduces the empirical strategy; Section 4 details the empirical results and discussions; Section 5 provides the conclusions and policy implications.