Title：The Impact of the Depth of the Clauses in Regional Trade Agreements on OFDI of Chinese Enterprises

Authors：Donglin Li, Chunding Li, Chaokai Xu

Abstract：The clauses related to investment opening are the essential part of regional trade agreements, but there is still room for further expansion in the existing analysis of the impact of the depth of the clauses in trade agreements on outward foreign direct investment (OFDI) of the enterprises. Based on the heterogeneity theory of FTA clauses and the existing research foundations, this paper constructs the depth of “WTO-plus” clauses, the depth of “WTO-extra” clauses, the depth of core clauses, the depth of border clauses and the depth of behind-the-border clauses, and introduces a single-country model to investigate the impact of the depth of FTA clauses on the effectiveness of OFDI of China’s enterprises. The research reveals that the depth of FTA clauses has a significant positive correlation with the effectiveness of OFDI of Chinese enterprises, and the positive effects of the depth of post-boundary clauses and the depth of “WTO-extra” clauses are significantly stronger than those of the depth of boundary clauses and the depth of “WTO-plus” clauses. Further research shows that the depth of FTA clauses enhances the investment effectiveness by improving the business environment of the host country and the depth of FTA clauses exerts positive effect on OFDI and non-greenfield investment of the state-owned enterprises.

Keywords：Regional Trade Agreements, Depth of Clauses, Outward Foreign Direct Investment (OFDI), Business Environment