Outward Foreign Direct Investment of Chinese Enterprises

Chapter 1 The Exceptional Performance of Chinese Outward Direct Investment Firms 6

1 Introduction. 6

2 Literature Review.. 7

3 Data and Empirics 8

3.1 Data. 8

3.2 Empirical Results 10

3.3 Benchmark Estimates 10

3.4 Alternative Measure of Firm Performance. 11

3.5 Robustness Checks 11

4 Policy Suggestions 14

5 Conclusions 15

Chapter 2 Firm Productivity and Outward Foreign Direct Investment: A Firm- Level Empirical Investigation of China. 17

1 Introduction. 17

2 Data and Measurement 20

3 Determinants Affecting Enterprises' Entry into the FDI Market 24

4 Enterprise Productivity and the Enterprise FDI Decision. 29

4.2 Endogeneity between OFDI and Firm Productivity. 31

4.3 Relationship between Firm Productivity and Income Level of the Destination Country. 32

4.4 Enterprise OFDI and Industry Labor Intensity. 35

5 Impact of Firm Productivity on the Volume of OFDI 36

5.1 Benchmark Regression. 37

5.2 Endogeneity Analysis 38

5.3 Additional Robustness Tests: Analysis Based on the Gravity Equation. 40

6 Summary. 41

Appendix. Estimation of TFP Using the Olley and Pakes (1996) Method. 42

Chapter 3 Distribution, outward FDI, and productivity heterogeneity: China and cross-countries' evidence. 44

1 Introduction. 44

2 Model 47

3 Data and measures 51

3.1 FDI decision data. 51

3.2 FDI flow data. 52

3.3 Firm-level production data. 52

3.4 Data merge. 53

4. Extensive margin of FDI 56

4.1 Descriptive analysis on productivity differences 56

4.2 Extensive margin of FDI 58

4.3 Estimates with rare events corrections 59

4.4 Multinomial logit estimates with distribution FDI 61

4.5 Endogeneity of firm productivity. 64

4.6 Discussions of fixed costs ordering. 65

5 Type-2 Tobit estimates of intensive margin. 67

6 Investment destination. 69

6.1 Communication costs in destination markets 69

6.2 Investment decision by destination income. 71

6.3. Threshold estimates of the linder hypothesis 73

7 Concluding remarks 74

Chapter 4 Outward FDI and Domestic Input D Distortions: Evidence from Chinese Firms 76

1 Motivation and Findings 76

2 Data and Stylised Facts 80

2.1 Data. 80

2.2 Measures 82

2.3 Stylised Facts 84

3 Model 91

3.1 Setup. 91

3.2 Domestic Production, Exporting and FDI 93

3.3 Domestic Distortion and Patterns of Outward FDI 95

4 Evidence. 102

4.1 FDI Decision and Firm Ownership. 102

4.2 Input Market Distortions 104

4.3 Channels and Sectoral Heterogeneity. 106

4.4 Capital Intensity and Pattern of Outward FDI 107

4.5 Estimates at the Intensive Margin. 108

4.6 Outward FDI Data between 2000 and 2013. 109

5 Concluding Remarks 110

Chapter 5 Does Outward FDI Generate Higher Productivity for Emerging Economy MNEs? - Micro-level Evidence from Chinese Manufacturing Firms 111

1 Introduction. 111

2 Literature review and hypothesis development 114

2.1 OFDI and EMEs' productivity growth. 119

2.2 State ownership and OFDI's productivity effect on EMEs 121

2.3 Absorptive capacity and OFDI's productivity effect on EMEs 124

2.4 Investment destination and OFDI's productivity effect on EMEs 124

3 Methodology. 126

3.1 Data. 126

3.2 Meas