Author(s): Chen Jianxun, Zhao Zhengyi, Institute of International Economy, University of International Business and Economics
Pages: 25-37+71+155
Year: 2016 Issue:  10
Journal: Zhejiang Social Sciences
Keyword:  Investment development path; economic development level; foreign exchange reserve; net outward investment;
Abstract: Given the inconsistent finding in extant literature on investment development path theory,this study tries to integrate the paradoxical finding by exploring its mediating mechanism. By integrating investment development path(IDP) theory and three-gap theory, this study enriches the theoretical mechanism of IDP theory on the foreign exchange reserve perspective, and adopts the cross-country panel data including 136 countries from 1985 to 2014, conducts dynamic analysis to examine the feasibility of IDP theory in developed and developing countries. Our finding reveals that, the reason for the IDP characterized by S curve is not the direct curvilinear effect rather it’s the indirect curvilinear effect through the mediating role of foreign exchange reserve. By the comparison analysis, we found that IDP theory could basically be significantly supported in developed countries, while insignificant in developing countries.