Grey incidence analysis on location choice determinants of China's OFDI in major countries of “the belt and road”

Abstract

Based on economic development and resource of Countries of “the Belt and Road”, the paper divides OFDI into two types by clustering analysis which are Resource Acquisition OFDI and Market Acquisition OFDI, and uses the method of Grey Incidence Analysis to conduct an empirical research on location choice determinants of OFDI from China to Major Countries of “B&R”. It shows that market size, political corruption, labor cost, bilateral trade stability, the level of infrastructure, and natural resource endowments are the main factors. In addition, as for two types OFDI, their main factors which affect investment location choice are different: the important factors which determine the location of China's Resource Acquisition OFDI are bilateral trade stability, labor cost and political corruption of host countries; for market acquisition OFDI, the significant factors are market size, infrastructure, bilateral trade, and political corruption of host countries.