BRI’s Effects on Foreign Investments:DID Test Based on China’s Greenfield Investments in 2005-2016

This paper employs relatively more detailed and accurate data currently available from the Global Corporate Greenfield Investments Database 2005-2016 for an all-round analysis of the investment effects of the Belt and Road Initiative(BRI)based on the difference-in-differences(DID)model as an effective identification method for event evaluation.Our findings suggest that the BRI has sharply increased growth in outbound greenfield investments by Chinese companies and led to an increase in the number of investment projects in BRI countries by around 32%.A series of validity and robustness tests has demonstrated the existence of such positive effects.The BRI has facilitated greenfield investments by Chinese companies through“five links,”i.e.infrastructure interconnection,policy communication,financial intermediation,trade,and people-to-people exchanges.Our heterogeneity analysis found that geographically,the BRI has played a more significant role in facilitating investment growth in the Maritime Silk Road countries and China’s neighboring countries involved in the BRI,and no significantly positive effect exists for investment in economies with high political risks.From a dynamic perspective,the BRI stimulates investment by expanding the intensive margins,i.e.spurring investment growth in existing investment projects or economies home to those projects.Judging by the results of the difference-in-differences-in-differences(DDD)model,the BRI’s positive effects on outbound investment are focused on infrastructure sectors such as energy,transportation and communication.In terms of the sources of investment,the BRI did not create any significant investment promotion effect for key Chinese provinces involved in the BRI.

Financing Constraints and the Mode of Outward Foreign Direct Investment:Cross-Border Mergers and Acquisitions or Greenfield Investment

In this paper,two investment modes,greenfield investment and cross-border mergers and acquisitions,are introduced on the basis of Manova(2008),and it is found that enterprises with less financing constraints tend to choose cross-border mergers and acquisitions.Therefore,this paper takes Chinese industrial enterprises that conducted cross-border mergers and acquisitions and greenfield investment in 2003−2010 as examples to test the above hypothesis.The result shows that enterprises with lower financing constraints are more likely to choose cross-border mergers and acquisitions,while those with stronger constraints choose greenfield investment.More specifi cally,a 1%reduction in financing constraints raises the probability of choosing cross-border mergers and acquisitions by 2.51%.The authors also find that the influence of financing constraints varies under different investment motivation.For business service and production-related investment,enterprises with lower financing constraints tend to choose cross-border mergers and acquisitions;while for R&D investment,financing constraints have no impact on the choice of investment mode.