Inward Foreign Direct Investment, Entrepreneurial Behavior, and Outward Foreign Direct Investment: Evidence from China

  •  Mo Ziying    


As a leading foreign investor among all emerging countries, China has been developed to investigate in severalstudies by focusing on inward foreign or outward foreign investment, respectively. However, limit has been related to the relationship between Inward Foreign Direct Investment (IFDI) and Outward Foreign Direct Investment (OFDI), relying on the evidence from China. As the conditions and variables that characterized theIFDI and OFDI have been overhauled, a new framework is required to evaluate their relationship, relating therole of entrepreneurial characteristics. In this study, on the basis of the planned behavior theory, we investigatethe relationship between IFDI, entrepreneurial behavior and OFDI in a structural contingency framework. Collecting China’s panel data set of ten main industrial areas in the period from 2003 to 2012, we first developthe panel unit root tests and Hausman test for the panel data measures. Then, applying the Pooled RegressionModel test, we secondly hypothesis and conclude that the IFDI is negatively related to OFDI in China. We alsofind evidence that OFDI is significantly influenced by the entrepreneurial behavior in China—outwards entrepreneurial behavior, “the index of entrepreneurs’ confidence (EEI)” is negatively related to OFDI while the inwards entrepreneurial behavior, “the index of business condition (BCI)” is positively related to OFDI in China.

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