China’s Outward Foreign Direct Investment in the Greater Mekong Subregion

Panthamit, Nisit; Chaiboonsri, Chukiat

doi:2020.35.1.129

The Journal of Economic Integration 2020 March;35(1) :129-151.
DOI: https://doi.org/10.11130/jei.2020.35.1.129

China’s Outward Foreign Direct Investment in the Greater Mekong Subregion

Nisit Panthamit ¹ and Chukiat Chaiboonsri ¹

¹Chiang Mai University, Thailand

Corresponding Author: Nisit Panthamit ,Tel: +66811113305, Email: nisit.p@cmu.ac.th, nisitp@gmail.com

ABSTRACT

This article identifies the main determinants of China’s outward foreign direct investment (OFDI) activities with Greater Mekong Subregion (GMS) countries, namely, Cambodia, Lao, Myanmar, Vietnam, and Thailand during the period between 2007 and 2016. We established the Bayesian panel data approach combination. The results of this study show that a higher economic growth rate, gross domestic product, and political stability tend to increase the likelihood of receiving Chinese outward foreign direct investment. On the other hand, higher foreign direct investment performance, inflation rates, rule of law, and business freedom tends to decrease the probability of being a recipient of Chinese outward foreign direct investment. Compared with previous studies that only assessed economic variables, the innovation of this study lies in its inclusion of socio-political variables.

JEL Classification

F15: Economic Integration

Keywords: Outward Foreign Direct Investment (OFDI) | Belt and Road Initiative (BRI) | China-Greater Mekong Subregion (GMS) | Bayesian Regression Approach