The effect of the Belt and Road Initiative on host countries
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2021-09-14
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en
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Abstract
This paper examines the economic effects of the Belt and Road Initiative (BRI) for 72 countries over the period 2002-2019. The main topic of the paper investigates whether BRI host countries benefit from improved infrastructure. This is analyzed using a random effects model. In this model, infrastructure is measured by an index that is constructed using a Principal Component Analysis. The econometric analysis shows that infrastructure is strongly correlated with GDP per capita. Furthermore, this baseline analysis is augmented with a Two-step System GMM estimation. The GMM estimation reveals that there is a causal effect going from infrastructure to GDP per capita. In addition to this main topic, five sub-topics are investigated. Two sub-topics consider the mediating effects of exports and productivity. No robust evidence is found that these factors mediate the relationship between infrastructure and GDP per capita. Another sub-topic considers whether debt distress inhibits positive effects of infrastructure. This also does not appear to be the case. The final two sub-topics look at the confounding effects of time and development. It is found that infrastructure investments have a long-lasting effect on economic performance, and the effect of infrastructure is less pronounced in developed countries compared to developing countries.
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Faculteit der Managementwetenschappen