What does this research mean for the field?

Heightened USA-China geopolitical tensions significantly reduce aggregate inward foreign direct investment in both countries in both the short and long term. Novelty: ClaimNovelty.INCREMENTAL. Consensus alignment: ConsensusAlignment.NEUTRAL.

What question did this study set out to answer?

To examine the relationship between escalating USA–China tensions and aggregate inward foreign direct investment in both economies from 1993 to 2023.

September 8, 2026International journal of organizational analysis

Risk or opportunity? USA–China tensions and the shift in foreign direct investment patterns

View Full Paper

Ask AI

Bookmark

Authors

UFUmar FarooqShanxi University of Finance and Economics BSBilal Haider SubhaniXidian University MTMosab I. TabashAl Ain University

Discussion

Member takes

Implication

Econometric panel study demonstrates reduced inward foreign direct investment during USA–China tensions, highlighting geopolitical risk as a major deterrent to cross-border capital flows.

Key Points

To examine the relationship between escalating USA–China tensions and aggregate inward foreign direct investment in both economies from 1993 to 2023.
Analyzed panel data from 1993 to 2023 across the USA and China using Cross-Sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) and Fully Modified Ordinary Least Squares (FMOLS) regressions.
Incorporated a geopolitical tension index measuring trade disputes, sanctions, and diplomatic friction alongside standard macroeconomic controls to address endogeneity and cross-sectional dependence.
Both CS-ARDL and FMOLS models demonstrated a statistically significant negative association between bilateral tensions and aggregate inward foreign direct investment in both the short and long run.
Heightened geopolitical uncertainty, combined with trade restrictions, tariffs, and sanctions, consistently discouraged cross-border investment flows between the two nations.

Cite This Study

Farooq et al. (2026) studied this question.

synapsesocial.com/papers/6a9fd78a58e84d0ff5b4646b https://doi.org/10.1108/ijoa-01-2026-6488

View Full Paper

Ask AI

Bookmark

Implication

Econometric panel study demonstrates reduced inward foreign direct investment during USA–China tensions, highlighting geopolitical risk as a major deterrent to cross-border capital flows.

Risk or opportunity? USA–China tensions and the shift in foreign direct investment patterns

Discussion

Member takes

Implication

Key Points

Cite This Study

Risk or opportunity? USA–China tensions and the shift in foreign direct investment patterns

Discussion

Member takes

Implication

Key Points

Cite This Study

Also Consider

Also Consider