Outward Foreign Direct Investment and Export Technology Complexity: Evidence From China Customs Data

This paper investigates the impact of outward foreign direct investment (OFDI) on the technological complexity of export products in the home country, drawing on panel data from 31 Chinese provinces between 2008 and 2022. Utilizing a two-way fixed-effects model and mediation analysis, we find that OFDI significantly enhances export technological complexity: a 1% increase in OFDI raises export technological complexity by approximately 0.025% in the baseline model. Mechanism tests show that knowledge absorption, R&D investment, and resource allocation efficiency mediate this relationship, accounting for 21.42%, 24.62%, and 17.16% of the total effect, respectively. Regional heterogeneity analysis reveals that the effect of OFDI is strongest in eastern provinces and remains positive in western regions, while it is insignificant in central China. These findings indicate that OFDI serves as a critical driver of export upgrading and reverse technology spillovers in developing economies. Policy implications include promoting OFDI in technology-intensive sectors, enhancing firms’ absorptive capacity, and supporting innovation-oriented institutional environments to facilitate knowledge transfer and trade transformation.