Revisiting the Weak-Institution Preference of Chinese OFDI: A Comparative Analysis with Emerging Peers

This paper reevaluates whether Chinese outward foreign direct investment (OFDI) exhibits the widely claimed weak-institution preference by benchmarking it against other emerging economies. Using panel data of OFDI from emerging economies over 2009–2017 and a Heckman two-stage model, we find that contrary to the conventional view, Chinese OFDI is more likely than that of its emerging-economy peers to enter and expand in host countries with better business environments. Further analysis attributes this pattern to the dual-institutional complementarity between host-country business attractiveness and home-country institutional support. These findings refine the Chinese OFDI model and offer insights for emerging markets.