1.3.2　Research Questions

This book examines how economic risk affects China's OFDII from the investment scale and efficiency under the Belt and Road Initiative. In order to conduct this research comprehensively，this book explores in the following logical order：

Firstly，examine how the Belt and Road Initiative affects the scale of China's OFDII，promoting or inhibiting it? This provides the empirical basis for our subsequent investigation of the role of the Belt and Road Initiative. Secondly，examine the impact of economic risk on China's OFDII scale，and the role of the Belt and Road Initiative in it，trying to answer：How does economic risk affect the level of China's OFDII? Has the Belt and Road Initiative reduced the impact of economic risk on China's OFDII? Thirdly，measure the efficiency of China's OFDII，and examine the effect of economic risk on the efficiency of China's OFDII and the role of the Belt and Road Initiative，trying to answer：How does economic risk affect the efficiency of China's OFDII? What role does the Belt and Road Initiative play in this? This research will carry out detailed investigations and analyses for each of the above issues.

1.3.2.1　The impact of the Belt and Road Initiative on the scale of China's OFDII

The rapid development of OFDI around the world has attracted the extensive attention of scholars，and most studies have carried out qualitative analyses and empirical explorations on the motivation and location decision of OFDI（Buckley et al.，2007；Nourzad et al.，2014）. However，as a critical investment industry that affects a country's national economy and people's livelihood，foreign infrastructure investment has not received enough attention. Earlier studies mainly analyze infrastructure as one of the influencing factors of investment and economic development（Luiz，2010）. There are few studies on OFDII's location decision and risk factors. Therefore，more focused studies on OFDI in the infrastructure industry are also needed.

Previous studies have qualitatively pointed out that the Belt and Road Initiative can not only directly affect the development of foreign infrastructure investment，but also indirectly affect the investment behavior of enterprises by providing a series of policy support and institutional guarantees to companies（Lu et al.，2019）. However，it is not enough to quantitatively discuss the extent to which the Belt and Road Initiative can actually drive foreign infrastructure investment and whether there are differences in the actual contribution of the Belt and Road Initiative to different infrastructure categories. Moreover，it is unclear what mechanism the Belt and Road Initiative will use to influence OFDII.

Based on this，I use the panel data of China and 149 countries from 2003 to 2019 to construct the difference-in-differences（DID）model to explore the impact of the Belt and Road Initiative on China's OFDII. Specifically，this part mainly studies three aspects. Firstly，I examine the impact of the Belt and Road Initiative on China's OFDI infrastructure，and explore whether the impact is more significant in countries along the Belt and Road. Secondly，I subdivide the infrastructure industry into transportation，energy，and telecommunication to conduct heterogeneous analyses between the Belt and Road Initiative and foreign infrastructure investment. Thirdly，I examine the mechanism by which the Belt and Road Initiative affects China's OFDII.

1.3.2.2　The impact of economic risk on the scale of China's OFDII and the role of the Belt and Road Initiative

Under the Belt and Road Initiative，the infrastructure-led OFDI strategy will be the priority in China's opening up strategy in the future. In this context，China's foreign infrastructure construction will develop rapidly. However，infrastructure projects are characterized by a massive amount of capital and a long cycle，and they also involve the national economy and people's livelihoods of the host country. Therefore，OFDI in the infrastructure industry is more susceptible to the risk factors of the host country.

With the rapid development of foreign direct investment，studies on country risk have received extensive attention. Still，these studies have paid more attention to the impact of host country political risk on foreign direct investment. Research on the relationship between economic risk and foreign direct investment is insufficient. However，the economic risk may have as much impact on FDI as political risk（Duanmu，2012）. As Yu（2017）has pointed out，the host country's economic stability and socioeconomic conditions will directly affect the interest and security of foreign investment，which in turn affects the entry of FDI. Moreover，from a practical point of view，foreign infrastructure investment is closely related to the host country's economic development，which also means that the impact of economic risk on foreign infrastructure investment may be more important. Therefore，more and more empirical studies are needed to examine the relationship between economic risk and foreign infrastructure investment.

Some studies have pointed out that a country's OFDI activities may also be affected by the third country. That is，there may be spatial dependence effects，which benefit from the increasingly close economic connectivity in the world（Blanc-brude et al.，2014；Gong and Yin，2015）. Scholars have conducted empirical studies on the possible spatial dependence effect of OFDI. Still，they have not reached a consensus on whether there is a complementary or competitive relationship between the investor country's OFDI in the host country and the investor country's OFDI in the third country（Ma and Liu，2016）. And it is uncertain whether unobservable factors in the third country can significantly promote or hinder OFDI from the investor country to the host country（Xie and Liu，2011；Baltagi and Egger，2007）. Therefore，more empirical studies are still needed to examine the possible spatial dependence effect of OFDI.

This part uses cross-country panel data of China and the host countries to construct spatial econometric models to empirically study the possible spatial dependence effect of China's OFDII，and explore the impact of economic risk on China's OFDII and the role of the Belt and Road Initiative. Specifically，this part mainly studies the following aspects. Firstly，I examine the spatial dependence effect of China's OFDI in infrastructure. Secondly，I explore the impact of economic risk on China's OFDI in infrastructure. Thirdly，I also explore the heterogeneous impact of economic risk on China's OFDII in countries with different income levels and natural resource endowments. Fourthly，I conduct mechanism analysis in terms of the influence of economic risk on foreign infrastructure investment；in addition，I examine the role of the Belt and Road Initiative in the relationship between economic risk and China's OFDII. That is，whether the implementation of the Belt and Road Initiative has caused changes in the relationship between economic risk and China's OFDII.

1.3.2.3　The impact of economic risk on China's OFDII efficiency and the role of the Belt and Road Initiative

Unpredictable investment costs，fluctuations in expected investment returns，and possible investment risks during the investment process will all lead to inefficiencies in investment，which is reflected in the welfare loss of China's OFDI. These welfare losses are more prominent in the context of continued growth in China's OFDI.

Some scholars have paid attention to investment efficiency and its influencing factors，pointing out that factors that can affect the location decision of OFDI，such as the host country's politics，economy，and resources，also affect investment efficiency. In terms of research method，the primary method of OFDI efficiency is the combination of the gravity model and the stochastic frontier method（Nourzad，2008；Zhang and Yang，2020）. On this basis，some scholars have investigated the influencing factors of OFDI efficiency from the perspective of the institution and economic structure（Li et al.，2015）. Some scholars also point out that the economic structure and infrastructure of the host country are the reasons that affect the efficiency of OFDI（Song et al.，2017；Hu et al.，2017）. However，there are few studies on the economic risk of the host country and the OFDI efficiency，especially foreign infrastructure investment. The survey on investment efficiency using stochastic frontier models is still in the primary stage.

This section focuses on the impact of economic risk on the efficiency of foreign infrastructure investment. From a theoretical point of view，economic theory has pointed out that scale and efficiency are closely related，and scale will jointly affect efficiency through economies of scale and the law of diminishing marginal returns（Hu and Wang，2016）. Therefore，in the context of studying the impact of economic risk on investment scale，continuing to examine the influence of economic risk on the efficiency of OFDI in infrastructure enriches existing research. From a practical point of view，in the presence of economic risk，investment cannot reach the optimal level，and there is still a lot of climbing space for improvement in overall investment efficiency. Therefore，how to reduce the loss of efficiency and improve the level of efficiency is one of the focus issues that Chinese enterprises are currently facing in overseas investment. Examining the effect of economic risk on the efficiency of OFDII has important practical significance for deepening infrastructure connectivity and guiding multinational enterprises to improve investment efficiency and returns.

Therefore，the primary purpose of this section is to measure the efficiency of China's outward foreign direct investment in infrastructure and empirically study the impact of economic risk on the efficiency of China's OFDII. And I also try to explore the role of the Belt and Road Initiative. This part combines the gravity model with the stochastic frontier method to construct the stochastic frontier investment gravity model to explore the impact of economic risk on the efficiency of China's OFDII. This research try to answer the following questions：Are there inefficiencies in China's OFDII? How do economic risk and its components affect the efficiency of China's foreign direct investment in infrastructure? Has the impact of economic risk on the efficiency of China's OFDII changed under the Belt and Road Initiative? Are there regional differences in the efficiency of China's OFDII in different countries?