The Impact of the Belt and Road Initiative on Outward Foreign Direct Investment: Evidence from Chinese firms

Purpose - This paper scientifically evaluates the promotion effect of the BRI on corporate OFDI, which can help in understanding China’s OFDI issues more deeply, and provide reliable empirical evidence for companies. Design/Methodology/Approach - Based on the data of overseas subsidiaries of Chinese A-share listed companies from 2012 to 2022, this paper considers BRI a policy event. It uses the difference-in-difference method to test the impact of the BRI on Chinese firm foreign direct investment. Findings - The study found that BRI significantly increased the level of OFDI of Chinese listed companies. The mechanism test found that BRI also enabled supported enterprises to obtain more tax incentives and government subsidies for overseas investment, thereby increasing the level of OFDI of enterprises. Research Implications - This paper draws on the idea of quasi-natural experiments, takes BRI as the entry point of the causal identification mechanism, and explores its impact on corporate outward direct investment, which helps to enrich the research results on the influencing factors of corporate outward direct investment and the economic effects of BRI. Also, It provides a logical paradigm based on the channels of “government subsidies” and “tax incentives” to explore the internal logic of BRI’s impact on enterprise overseas direct investment. It also introduces the characteristics of enterprises and host countries and the level of political connections of enterprises into the analysis framework of the promotion effect of BRI to explore whether BRI has a heterogeneous impact on the level of enterprise overseas direct investment.