Exploration of the Impact of China’s Outward Foreign Direct Investment (FDI) on Economic Growth in Asia and North Africa along the Belt and Road (B&R) Initiative

Round 1

Reviewer 1 Report

Exploration of the Impact of China’s Outward FDI on Economic 2 Growth in Asia and North Africa along Belt and Road (B&R)

 

Summary: 

 

The paper has examined the impact of Chinese investments, namely infrastructure, energy, services, other investment sectors, and trade openness on the economies of the twenty-five Asian and North African countries along with the Belt and Road (B&R) initiative for a period of 2007 to 2016 using the Johansen Fisher Panel Cointegration Test, Panel Dynamic Ordinary Least Squares (PDOLS) model, the Toda and Yamamoto technique for testing causality. The findings revealed cointegration among the variables and that the impact of Chinese investments on economic growth in the host countries is positive, but it has a weaker effect to a certain extent in all sectors of the host countries while trade openness positively impacts the countries. Furthermore, there is evidence of a unidirectional causality between some FDI economies while the investment in services and other sectors does not cause economic growth in the host countries. Based on the results, the paper proposes the host countries to increase the FDI in the sector of infrastructure, energy, and technology to enhance their economies.

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Comments:

The issue is interesting and investigated in the literature, especially in the aftermath of the recent anti-globalization trends. It is not clear at all the contribution to the literature and the innovation provided by the authors of this paper.

I spotted some deficiencies which hopefully can be rectified. Below are my observations, which I would like to share with the author(s).

• It is better to clarify the importance of the included variables.
• The author(s) should include core variables such as financial development variables ( exchange rate  and economic freedom  which are considered as  risk factors as well).

I do advise the author(s) to read Barrell and Nahhas (2018) which covers the previous points.

• Regarding the results: statistical results are not enough, more discussion is required which might help investors and policy makers.
• It is better to mention the references in the body instead of reference number.

References:

 

Barrell and Nahhas (2018). "Economic integration and bilateral FDI stocks: the impacts of NAFTA and the EU. ", LSE Research Online Documents on Economics 90372, London School of Economics and Political Science, LSE Library.

Author Response

Please find response to Reviewer 1 Comments.Thank you

Author Response File: Author Response.pdf

Reviewer 2 Report

The approached topic is very interesting and actual. Methodologically, the paper meets the standard for publication.

However, I would recommend adding a new subsection of discussions related to the main findings and to offer a more in depth sub-section of policy implications maybe included within the conclusions' section.

Author Response

Please find response to Reviewer 2 comments.Thank you

Author Response File: Author Response.pdf

Reviewer 3 Report

The originality of the article is ensured both by the data used and by the proposed topic. The hypotheses and the econometric specifications proposed by the authors are correct and in accordance with the objectives stated in the first part of the article.

Considering the results of the study, I recommend the following changes to the authors;

1. In the introduction section, the author could present the application of IDP theory for Chiniese economy.
2. The author must give a proper reason for the choosen period of analyze (2007-2016), why not 2007-2019, for example.
3. The author must extend the conclusions section in order to present in more detail the results of the study and the practical implications for various corporate stakeholders.
4. The author must present some future research directions considering the extension of the research on other geographical regions or on certain economic fields where the Chinese FDI has special valences.
5. In this sense, I also recommend consulting the following articles whose findings could be presented in the literature review section.
6. Latief, R., & Lefen, L. (2018). The effect of exchange rate volatility on international trade and foreign direct investment (FDI) in developing countries along “one belt and one road”. International Journal of Financial Studies, 6(4), 86.
7. Kang, L., Peng, F., Zhu, Y., & Pan, A. (2018). Harmony in diversity: can the one belt one road initiative promote China’s outward foreign direct investment?. Sustainability, 10(9), 3264.
8. Mekhdiev, E., Pashkovskaya, I., Takmakova, E., Smirnova, O., Sadykova, K., & Poltorykhina, S. (2019). Conjugation of the Belt and Road Initiative and Eurasian Economic Union: Problems and Development Prospects. Economies, 7(4), 118.

Author Response

Please find response to Reviewer 3 comments. Thank you

Author Response File: Author Response.pdf

Round 2

Reviewer 3 Report

The authors took into account the recommendations of the reviewers, and the quality of the manuscript improved, which is why I recommend the publication of the article. (In section 5, the numbering 5.1 can be omitted, because there is no 5.2.)

 

Congratulations to the authors for the quality of the scientific approach.

Author Response

Please find our response to REVIEWER 3 comments.Thank you

Author Response File: Author Response.docx

This manuscript is a resubmission of an earlier submission. The following is a list of the peer review reports and author responses from that submission.