Attracting Foreign Investment and Its Influence on Outward Investment in Developing Countries: An Empirical Analysis Based on China's Reform and Opening-up Experience

This paper aims to explore whether attracting foreign investment promotes outward foreign investment in developing countries, taking China’s experience during its reform and opening-up as a typical case.By leveraging panel data encompassing 31 provinces (municipalities) across China spanning the period from 2007 to 2022, it employs empirical methods to examine FDI’s impact on OFDI. The results show that: 1) FDI generally enhances provincial OFDI regardless of control variables and fixed effects; 2) regional heterogeneity exists—FDI inhibits OFDI in eastern and central regions but promotes it in western China; 3) government incentive policies are closely associated with OFDI’s formation and growth. The study provides empirical evidence for developing countries to optimize their open development paths.