Policy-driven FDI dynamics: Examining the rising proportion of OECD and China’s outward capital flows

This paper examines the impact of China’s foreign policies, notably the Belt and Road Initiative (BRI) and China-Overseas Countries Zones (COCZs), on the outward foreign direct investment (OFDI) dynamics between OECD countries and China. Using a difference-in-difference approach and panel data from 2005 to 2022, the study finds China’s policies have positively influenced the OFDI share of OECD countries in host nations. The heterogeneity analysis reveals that the BRI is particularly effective in low-income, low-technology host countries, while COCZs show greater impact in high-income, high-technology contexts. Moreover, the mediation effects indicate that these policies enhance host countries’ governance, financial openness, and infrastructure, thus improving their investment attractiveness. Therefore, the study provides a new perspective for understanding cooperative international policies, emphasizing the importance of international cooperation in global economic development.