Journal of Sun Yat-sen University (Social Science Edition), 2022, Issue 2

Authors: Luo Wei, Lv Yue

Abstract: This article aims to explore how the position of global value chain division of labor affects the decision-making of real economy enterprises in outward foreign direct investment (OFDI). To this end, the article measures the position of enterprises in the global value chain division of labor through the upstream degree of the value chain, identifies the number of OFDI projects of enterprises in the list of overseas investment enterprises, and uses negative binomial regression and other counting models to evaluate the causal relationship between the two. The estimation results show that the division of labor in the global value chain has a significant negative impact on the OFDI decisions of real economy enterprises. The lower the upstream degree (or downstream) of the enterprise value chain, the higher the tendency towards OFDI. In depth research on distinguishing types of OFDI shows that this negative relationship is mainly reflected in market seeking OFDI, efficiency seeking OFDI, and strategic asset seeking OFDI decisions, which are generally not significantly related to the position of the enterprise's value chain. After further considering the impact of domestic market size, the article found that domestic market size has a significant promoting effect on these two types of OFDI, and this effect is negatively correlated with the upstream degree of the value chain. From this, it can be seen that in industries with large domestic market size, downstream enterprises in the value chain tend to engage in efficiency seeking and strategic asset seeking OFDI more strongly, while upstream enterprises tend to engage in OFDI more strongly.

Keywords: global value chain; Upstream degree; Outward direct investment; Value chain upgrade