Home Country Economic Policy Uncertainty, Institutional Distance and Chinese Large Enterprises' OFDI

This study takes the large Chinese enterprises from 2005 to 2021 as the research object, empirically analyze the impact of the economic policy uncertainty of the home country on their OFDI. The empirical result shows that the economic policy uncertainty has a significant restraining effect on the OFDI, but institutional distance has a positive moderating effect on this negative impact. The heterogeneity analysis found that economic policy uncertainty has a significant inhibitory effect on the host countries whose institutional quality is higher or lower than China, Sate-owned enterprises, manufacturing industry and service industry, but it has no significant impact on non-state-owned enterprises' OFDI. However, the interaction term has a positive moderating effect on the host countries whose institutional quality is higher or lower than China, and service industry investment. Therefore, this paper further expands the research on the relationship between economic policy uncertainty and OFDI, and provides corresponding theoretical guidance for the government to formulate strategies to promote enterprises' outbound investment and reduce enterprises' investment risks.