The Non-linear Effect of Institutional Distance on the Location Selection of China's Outward Foreign Direct Investment

摘要

With panel data of 46 countries from 2003 to 2016, the author set up a static panel data model to investigate the relationship between the location selection of China's outward foreign direct investment and the institutional distances of different dimensions. The empirical results showed that there is a significant negative relationship between formal institutional distance, informal institutional distance and the location selection of China's outward foreign direct investment. In addition, the formal institutional distance cannot show its negative effect on location selection of China's outward foreign direct investment unless it was within a certain range, that is to way, there exists a non-linear effect of formal institutional distance on China's outward foreign direct investment. Meanwhile, in the case of formal institutional deficit, the negative effects played by the formal institutional distance on China's outward direct investment will be weakened.