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A Research on the Influence of Outward Foreign Direct Investment on Capacity Utilization
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TitleA Research on the Influence of Outward Foreign Direct Investment on Capacity Utilization  
AuthorYang Zhenbing and Yan Bing  
OrganizationNanjing University of Finance and Economics;Nankai university; 
Key WordsOutward Foreign Direct Investment; Capacity Utilization; Excess Capacity; Propensity Score Matching Model; Difference in Difference 
AbstractIn this paper, we will investigate whether the outward foreign direct investment (OFDI) of enterprises is beneficial to the improvement of the capacity utilization, and it has important significance to the introduction of follow-up policies to eliminate excess capacity. We employ an empirical model including propensity score matching model (PSM) and difference in difference (DID) to investigate the impact of OFDI on capacity utilization. We find that: the capacity utilization index of overall industry has remained at around 0.65, and experiences a cliff style decline in 2010; OFDI has a significant positive impact on the improvement of capacity utilization, and the results are still robust after adding other control factors, industrial, regional, time fixed effects, or even changing the matching ratio; the positive effect of OFDI in developing countries on capacity utilization is stronger than in developed countries; only the resource oriented OFDI effect is not obvious, trade, production and technology oriented OFDI have positive effects on the capacity utilization; The impact of OFDI on capacity utilization also reflects the obvious differences in ownership structure, industrial and regional characteristics, but in the enterprises with lower level of capacity utilization, the effect is stronger; OFDI has a positive impact on the comprehensive capacity utilization, mainly through the impact of capacity utilization in the production side, and this effect is achieved through the intermediary effect of technological progress. Therefore, to encourage enterprises to foreign direct investment, improve the production efficiency of the host country, and promote the factor-saving oriented innovation for the total factor production efficiency are conducive to ease the phenomenon of excess capacity. 
Serial NumberWP1246 
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