• ISSN: 2010-023X (Print)
    • Abbreviated Title: Int. J. Trade, Economics and Financ.
    • Frequency: Quaterly
    • DOI: 10.18178/IJTEF
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HOME > Archive > 2024 > Volume 15 Number 2 (2024) >
IJTEF 2024 Vol.15(2): 43-51
DOI: 10.18178/ijtef.2024.15.2.768

Is There Political Risk Preference in China’s OFDI under the “Belt and Road Initiative”?—A Difference in Differences Test Based on Investment Motives

Sukun Pan * and Yunxuan Hao
School of Economics and Management of the North China University of Technology, Beijing, China
Email: pansukun@163.com (S.P.)
*Corresponding Author

Manuscript received November 6, 2023; revised November 22, 2023; accepted January 11, 2024; published April 17, 2024.

Abstract—Based on the country-specific data of Chinese Outward Foreign Direct Investment (OFDI) and political risk data from the International Country Risk Guide (ICRG), this paper uses a difference-in-differences approach to examine impacts of the “Belt and Road Initiative” on political risk preference of Chinese OFDI. The paper also conducts heterogeneity analysis based on different investment motives. The findings are as follows: a) The “Belt and Road Initiative” significantly lowers the political risk of Chinese OFDI flowing to the “Belt and Road” countries, which reduces the subjective consciousness of political risk prevention. b) There is “political risk preference” of China’s OFDI along the “Belt and Road” countries and China’s OFDI is positively correlated with political risk in those countries. c) China’s resource-seeking OFDI along the “Belt and Road” countries is more likely to have “political risk preference.” d) Policy effects of the “Belt and Road Initiative” have diminished over time.


Keywords—the “Belt and Road Initiative”, Outward Foreign Direct Investment (OFDI), Difference-in-Differences (DID), political risk preference

Cite: Sukun Pan and Yunxuan Hao, "Is There Political Risk Preference in China’s OFDI under the “Belt and Road Initiative”?—A Difference in Differences Test Based on Investment Motives," International Journal of Trade, Economics and Finance vol.15, no.2, pp. 43-51, 2024.


Copyright © 2024 by the authors. This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).




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