Research on Innovation-Driven Expansion of Regional OFDI:New Evidence From a Business Environment Perspective

This paper investigates the impact of provincial innovation-driven efficiency on the expansion of regional Outward Foreign Direct Investment(OFDI) flows within the context of China’s economy during the period 2011 to 2020 by measuring the innovation-driven efficiency and business environment index using the DEA-Malmquist index and the combined CRITIC weighting method from the new perspective of business environment improvement. The findings reveal that:(a) There is an inverted U-shaped relationship between provincial innovation-driven efficiency and regional OFDI flows. This increase in innovation-driven efficiency can promote OFDI expansion of the region by improving its business environment.(b) The improvement of the business environments plays a significant intermediary and synergistic role in OFDI expansion driven by improved innovation efficiency.(c) The study of regional heterogeneity suggests that the central region enjoys the longest window period in terms of innovation-driven OFDI expansion, followed by the eastern region while the western region has the shortest window period. The improvement of the business environment in the western region is more effective in driving regional OFDI expansion. This conclusion remained true after the robustness test. In conclusion, this paper offers a few policy recommendations that can help Chinese capital of various kinds go global more effectively.