The Relationship between Domestic and Outward Foreign Direct Investment in China

Sammanfattning: The relationship between domestic investment and overseas investment has heavily analyzed before. With different situation, they get various results. Most of the analyses study the effect in the case of investments in developed countries, from high-production-cost home countries to low-cost host countries. In this study, we analyze this relationship in China, a low-cost host country. We use regression analyses with both time series data between 1985 and 2008 and panel data on the regions level. The results from both time series data and panel data analysis in our study imply that there is a significant positive relationship between OFDI and domestic investment in China.