Empirical Research on the Rapid Growth of China's ODI: Based on Multinational Panel Data

This paper focuses on the home-country factors determining the rapid growth of China's ODI and provides empirical evidence based on 66 countries panel data over 1991 to 2010. First, we expand the investment development path (IDP) theory by including financial factors to establish benchmark model. Then, we explore whether China's net ODI flow is excessive or insufficient by adding China dummy. Finally, we examine the special factors driving and hindering China's ODI by introducing interaction terms. The results reveal that China's ODI level is insufficient. The economic development, export and international reserve drive the growth of China's ODI, while crowing-out effect of domestic investment and poor financing condition are obstacles.