The Growth Impact of Chinese Direct Investment on Host Developing Countries

The growth impact of Chinese outward foreign direct investment (FDI) on host countries and how it differs from Western outward FDI (OFDI) are focus of this article. Using a cross-country dataset for 52 countries and comparing United States (US) and Chinese OFDI (COFDI), the article contemplates the unique features of COFDI—e.g., weak ownership advantages and strong state support—and their impact on host country growth through various transmission channels. It concludes both US and COFDI exert positive effects on capital accumulation of host countries with COFDI having a particularly strong impact on employment and productivity growth in developing countries.

*****This publication originally appeared in International Business Review, Vol. 29, No. 2 (April 2020), pp. 1-25. It is viewable at https://www.sciencedirect.com/science/article/abs/pii/S096959311930945X. Copyright remains with the original holders.