China’s Outward Foreign DirectInvestment and Economic Growth inDeveloping Countries

Abstract

The implementation of China’s open development strategy has unveiled awave of outward foreign direct investment (OFDI) by Chinese companies, with globalimplications. Based on panel data from 146 developing countries from 2003 to 2017, weinvestigate the growth effects of China’s OFDI. We find that China’s OFDI has promotedsignificant economic growth in developing countries. Not only could China’s OFDI increaseGDP per capita of a country in a short time but raise the country’s long-run equilibriumvalue as well. In addition, the growth effects of China’s OFDI were more significant forcountries with weak governance, rich resource, and modest human capital, and were abovethe average level for Belt and Road Initiative (BRI) countries, African countries, and in thepost-crisis era. Our research helps unravel the global significance of Chinese companiesinvesting overseas and contributes to research on the growth effects of direct investmentbetween developing countries.