Institutions and Foreign Direct Investment : China versus the Rest of the World

By Joseph P. H. Fan, Randall K. Morck, L. Xu, Bernard Yeung. 2009

131 citations recorded by the source corpus.

Summary Weak institutions impede foreign direction investment (FDI), yet China attracts massive FDI despite global media spotlighting its institutional infirmities. Standard institutional quality variables poorly track rapid transformations, like China' regime shift following Den Xiaoping's 1993 Southern Tour. Economy track record usefully augments these variables in such cases. Cross-country regressions controlling for institutional quality and economy track record reveal China's FDI inflow unexceptional. Rather, China's FDI inundation resembles analogous post-reform East Bloc events. Arguments that China's FDI inflow is inefficiently large because weak institutions deter domestic investment while special initiatives attract FDI are thus either unsupported or not unique to China.

Subfields: Economics and Econometrics, Finance, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/8eac87639af9fb2b91f434eedad202d786fa217f

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. S. Munjal
2. Peter J. Buckley
3. John C. Anyanwu
4. Qing Liu
5. W. Baah-Boateng
6. Michael A. Witt
7. Torben Pedersen
8. Gary Gereffi

In Finance

1. Peter J. Buckley
2. John C. Anyanwu
3. Qing Liu

In Strategy and Management

1. S. Munjal
2. Pei Yu
3. Peter J. Buckley
4. Pan Tao
5. John C. Anyanwu
6. Qing Liu
7. Michael A. Witt
8. Gary Gereffi

Citations in the corpus

• Why Does Foreign Direct Investment Go Where It Goes?: New Evidence From African Countries (2012, background): “Therefore, market size is proxied by urban population (as percentage of total population) of the host country (Fan et al, 2009) and GDP per capita (the level of economic activity/development) (Javorcik et al., 2011; Al-Sadig, 2009), which are expected to have a positive sign.”
• Exploring the relationship between institutional factors and FDI attractiveness: A meta-analytic review (2018, unknown): “In short, “good government” attracts FDI (Fan et al., 2009).”
• Working Paper 136 - Determinants of Foreign Direct Investment Inflows to Africa, 1980-2007 (2011, background): “Fernández-Arias (1996), Fernández-Arias and Montiel (1996), Gottschalk (2001) and calvo et al.”
• Formal Versus Informal Finance : Evidence from China (2008, unknown): “Fan et al. (2009) find that inward FDI within China flows disproportionately into 3091 at U niversity of M aryland on A pril 5, 2011 rfs.oxfordjournals.org D ow nloaded from The Review of Financial Studies / v 23 n 8 2010 provinces with less corrupt governments and governments that better protect…”
• The Institutional Influence on the Location Strategies of Multinational Enterprises from Emerging Economies: Evidence from China's Cross-border Mergers and Acquisitions (2016, background): “It is an also an indicator of a country’s political stability and the government’s economic track record (Fan et al., 2009).”