Chinese Outward Investment and the State: the OLI Paradigm Perspective

<p>In the given paper the phenomenon of Chinese outward investment is considered, its major features and trends, which have manifested since the outset of the 21^st century. The given process is comparatively new in the global economy and a very interesting point about it is that the Chinese government is actively participating in it, making the necessary adjustments. That is why in the analysis of Chinese outward investment was conducted in the context of two different kinds of policies: directly related to the outward investment of Chinese companies and the policies geared to improve science and technology infrastructure in the country. The latter seems to be necessary to help domestic companies to compete successfully with their foreign peers and is a very important component of the overall government influence on the process of outward investment. &nbsp;Moreover, in the paper the eclectic paradigm proposed by English economist John Dunning was used, from the perspective of which the state-company interaction was considered in the process of enterprise&rsquo;s internationalization. In particular it is noted in the paper that the corresponding policies in developing states may become the engine of local companies&rsquo; competitiveness growth both on domestic and international markets, even allowing them to become multinational enterprises. Thus, foreign investment is considered as a major tool of economic development in general, as one of its main drivers. In the relation to it the concept of the investment development path is also considered, where economic progress is regarded through the lens of outward and inward investment.</p><p>Despite the prevailing number of state-owned companies in Chinese outward investments, which primarily invest in natural resources, private companies are likely to become the main driver of this type of investment in the near future.&nbsp; It is actually the reason why the Chinese government is so active at stimulating companies to go abroad, while the very logic of investment development supports this point. It is the politicians in the developing countries which should enforce this kind of shift and ensure that private companies are capable enough to internationalize. That is why in the last chapter of the paper the model of state-company interaction is proposed with the usage of the eclectic paradigm as the major background for it. It is underscored in the model that two types of the aforementioned government policies actively influence on the companies&rsquo; competitiveness&nbsp; - <em>i.e. </em>their access to unique advantages in the form of government support&nbsp; (financial, informational, institutional) allows them to be more successful in their constant competition with foreign counterparts. Being more and more confident in the acquired advantages these enterprises see more opportunities abroad and start actively exploring the potential of other states (its markets, technological base, resources, <em>etc.</em>). That is why balanced and adequate policy, aimed to regulate foreign investment, is a must, which should be considered by other countries a well for the activation of successful economic development.</p>