What Affects China’s ODI to the Arab States? An Empirical Study of Panel Data Analysis

Abstract

The China-proposed “Belt and Road†initiative will bring new opportunities for Chinese enterprises’ ODI to Arab states. What affects China’s ODI to the Arab states? Based on the latest investment panel data of China in Arab countries (2004-2014), this study examines the influencing factors of China's ODI to Arab countries by reconstructing the investment gravity model. The empirical study in this paper presented China’s ODI is positively linked to economic scale of the Arab states, the scale of Chinese economy, the tax level of host country, the trade volume between the two states, and the host country natural resources endowment. Meanwhile, it is negatively associated with the host country's infrastructure level, wage level, exchange rate, and the distance between the two states. On the basis of empirical research results, this study finally gives conclusions.