Diplomatic Engagement and Economic Influence: The Interplay of Chinese OFDI and High-Level Visits
This study investigates the interdependence between Chinese outward foreign direct investment (OFDI) and high-level visits. Using a simultaneous equation model (SEM) and Three-Stage Least Squares (3SLS), we analyze a panel dataset comprising 146 host countries over the period 2003 to 2021, covering...
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| Format: | Article |
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Korea Institute for International Economic Policy
2024-12-01
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| Series: | East Asian Economic Review |
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| Online Access: | https://dx.doi.org/10.11644/KIEP.EAER.2024.28.4.440 |
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| author | Youngjun Choi Jiaen Li |
| author_facet | Youngjun Choi Jiaen Li |
| author_sort | Youngjun Choi |
| collection | DOAJ |
| description | This study investigates the interdependence between Chinese outward foreign direct investment (OFDI) and high-level visits. Using a simultaneous equation model (SEM) and Three-Stage Least Squares (3SLS), we analyze a panel dataset comprising 146 host countries over the period 2003 to 2021, covering the tenures of Presidents Hu Jintao and Xi Jinping. We further explore how the relationship between OFDI and diplomatic visits differs across developing and developed countries, as well as how shifts in political leadership influence these dynamics.
Our empirical findings reveal a robust interdependence between China’s economic actions and diplomatic engagements. Specifically, there is a strong mutual influence between OFDI and visits to developing countries. In contrast, while visits positively impact OFDI in developed countries, there is no reciprocal influence. Moreover, the interdependence between OFDI and visits was particularly evident during President Xi’s tenure, whereas no such relationship was established during President Hu’s tenure. Our findings emphasize the importance of high-level visits in driving OFDI and highlight the critical role of economic engagement in achieving diplomatic goals. Furthermore, by examining this relationship across two presidential tenures, we offer a nuanced perspective on how host country characteristics and leadership transitions shape the dynamics between OFDI and diplomatic visits. |
| format | Article |
| id | doaj-art-2b0f8d9026aa453283d4e744cd57c634 |
| institution | DOAJ |
| issn | 2508-1640 2508-1667 |
| language | English |
| publishDate | 2024-12-01 |
| publisher | Korea Institute for International Economic Policy |
| record_format | Article |
| series | East Asian Economic Review |
| spelling | doaj-art-2b0f8d9026aa453283d4e744cd57c6342025-08-20T02:58:19ZengKorea Institute for International Economic PolicyEast Asian Economic Review2508-16402508-16672024-12-0128439141910.11644/KIEP.EAER.2024.28.4.440Diplomatic Engagement and Economic Influence: The Interplay of Chinese OFDI and High-Level VisitsYoungjun Choi0https://orcid.org/0000-0002-4463-7332Jiaen Li1https://orcid.org/0000-0002-9797-3161Kyung Hee UniversityKwangwoon UniversityThis study investigates the interdependence between Chinese outward foreign direct investment (OFDI) and high-level visits. Using a simultaneous equation model (SEM) and Three-Stage Least Squares (3SLS), we analyze a panel dataset comprising 146 host countries over the period 2003 to 2021, covering the tenures of Presidents Hu Jintao and Xi Jinping. We further explore how the relationship between OFDI and diplomatic visits differs across developing and developed countries, as well as how shifts in political leadership influence these dynamics. Our empirical findings reveal a robust interdependence between China’s economic actions and diplomatic engagements. Specifically, there is a strong mutual influence between OFDI and visits to developing countries. In contrast, while visits positively impact OFDI in developed countries, there is no reciprocal influence. Moreover, the interdependence between OFDI and visits was particularly evident during President Xi’s tenure, whereas no such relationship was established during President Hu’s tenure. Our findings emphasize the importance of high-level visits in driving OFDI and highlight the critical role of economic engagement in achieving diplomatic goals. Furthermore, by examining this relationship across two presidential tenures, we offer a nuanced perspective on how host country characteristics and leadership transitions shape the dynamics between OFDI and diplomatic visits.https://dx.doi.org/10.11644/KIEP.EAER.2024.28.4.440outward foreign direct investmenteconomic diplomacyhigh-level visitsforeign policysimultaneous equation model |
| spellingShingle | Youngjun Choi Jiaen Li Diplomatic Engagement and Economic Influence: The Interplay of Chinese OFDI and High-Level Visits East Asian Economic Review outward foreign direct investment economic diplomacy high-level visits foreign policy simultaneous equation model |
| title | Diplomatic Engagement and Economic Influence: The Interplay of Chinese OFDI and High-Level Visits |
| title_full | Diplomatic Engagement and Economic Influence: The Interplay of Chinese OFDI and High-Level Visits |
| title_fullStr | Diplomatic Engagement and Economic Influence: The Interplay of Chinese OFDI and High-Level Visits |
| title_full_unstemmed | Diplomatic Engagement and Economic Influence: The Interplay of Chinese OFDI and High-Level Visits |
| title_short | Diplomatic Engagement and Economic Influence: The Interplay of Chinese OFDI and High-Level Visits |
| title_sort | diplomatic engagement and economic influence the interplay of chinese ofdi and high level visits |
| topic | outward foreign direct investment economic diplomacy high-level visits foreign policy simultaneous equation model |
| url | https://dx.doi.org/10.11644/KIEP.EAER.2024.28.4.440 |
| work_keys_str_mv | AT youngjunchoi diplomaticengagementandeconomicinfluencetheinterplayofchineseofdiandhighlevelvisits AT jiaenli diplomaticengagementandeconomicinfluencetheinterplayofchineseofdiandhighlevelvisits |