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    An examination of the role of comparative advantages on Chinese outward foreign direct investment: the case of cross-border mergers & acquisitions and greenfield investments

    Metallinou, Lida (2022) An examination of the role of comparative advantages on Chinese outward foreign direct investment: the case of cross-border mergers & acquisitions and greenfield investments. PhD thesis, Birkbeck, University of London.

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    Abstract

    Increasing outward foreign direct investment (OFDI) from China has attracted considerable academic attention. There is a growing discussion that Chinese OFDI is different from that of advanced countries. Existing research reveals the role of comparative advantage of home or host countries in determining patterns of countries’ OFDI. However, the literature has not adequately examined links between OFDI and the comparative advantage of China and host countries in the case of Chinese multinational corporations (MNEs). Consequently, this dissertation investigates the role of comparative advantage in explaining Chinese OFDI. The study reveals the complex, dynamic relationship between Chinese OFDI and comparative advantages by decomposing aggregate FDI and accounting for varying modalities: cross-border mergers and acquisitions (CBMAs) and greenfield investments (GIs), which previous literature has not addressed adequately. The study offers a parallel analysis of the role of comparative advantage in Chinese CBMAs and GIs and considers the One Belt One Road Initiative’s moderating effect. The dissertation drew on theoretical links between country-specific factors, countries’ comparative advantages, and firms’ ownership advantages. In synthesising these links, we explain the role of comparative advantage in Chinese OFDI and integrate the Ricardian theory of comparative advantage with existing international business theoretical frameworks. The empirical findings demonstrate that Chinese firms engaged in CBMAs emerge mostly from comparatively disadvantaged industries in China, while those engaged in GIs mostly emanate from comparatively advantaged industries in China. Chinese MNEs also invest in countries and industries in which host nations have a strong comparative advantage, regardless of modality. The comparative advantage of China and its host countries fulfil an influential role in developing and enhancing the ownership advantages of Chinese MNEs. In addition, our results suggests that OBOR initiative affects the activity of Chinese MNEs that conduct CBMAs. Specifically, we find evidence of the effect of China’s OBOR initiative on the relationship between Chinese CBMAs and comparative advantage of China. Under the Belt and Road initiative Chinese MNEs stimulated more Chinese CBMAs in related OBOR countries. The OBOR initiative alters the relationship between the industrial structure of Chinese CBMAs and the comparative advantage of China for OBOR and non-OBOR host countries.

    Metadata

    Item Type: Thesis
    Copyright Holders: The copyright of this thesis rests with the author, who asserts his/her right to be known as such according to the Copyright Designs and Patents Act 1988. No dealing with the thesis contrary to the copyright or moral rights of the author is permitted.
    Depositing User: Acquisitions And Metadata
    Date Deposited: 22 Mar 2022 10:10
    Last Modified: 22 Mar 2022 10:10
    URI: https://eprints.bbk.ac.uk/id/eprint/47919

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