OFDI and Corporate Innovation Under the Belt and Road Initiative: Evidence From China

This study investigates whether Belt and Road Initiative (BRI)-related Outward Foreign Direct Investment (OFDI) promotes corporate innovation in China. Using 6,818 firm-year observations from Chinese A-share listed firms between 2009 and 2023, we identify BRI-related OFDI events and measure innovation mainly by the proportion of invention patent applications to total patent applications. A conventional difference-in-differences design is used to compare firms investing in BRI destinations with comparable OFDI firms investing only in non-BRI destinations before and after the BRI policy period. The novelty of this study lies in integrating causal identification, research and development (R&D)-mediated transmission, and ownership and regional heterogeneity into a unified firm-level framework. The results demonstrate that BRI-related OFDI significantly improves firms’ innovation performance. The results of the mediation analysis indicate that R&D investment intensity partially transmits this effect, suggesting that internationalisation strengthens firms’ internal innovation input. Parallel-trend evidence, placebo tests, propensity score matching-difference in differences (PSM-DID) estimations, alternative dependent-variable specifications, and restricted-period checks support the robustness of the findings. Heterogeneity analyses reveal stronger effects among nonstate-owned enterprises and firms located in eastern China. Overall, BRI-facilitated internationalisation supports innovation-oriented upgrading and corporate economic resilience, although its benefits remain unevenly distributed.