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Foreign Investment across the Belt and Road : Patterns, Determinants, and Effects

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  • Xiaoyang Chen,Maggie
  • Lin,Chuanhao

Abstract

This paper examines the patterns and economic effects of foreign direct investment across the Belt and Road Initiative countries and assesses the potential role of the initiative in shaping the patterns and effects. Exploring cross-country bilateral transportation cost and foreign investment data, the analysis shows that, by reducing overall travel times and transportation costs, the proposed Belt and Road Initiative transportation network can pave the way for additional investments and increased growth in gross domestic product. But the magnitude of the effect varies significantly across source and destination countries. Aggregate foreign direct investment in Belt and Road Initiative countries is predicted to increase by around 5 percent, with regions such as Sub-Saharan Africa and East Asia and Pacific seeing greater potential gains. The increase in foreign direct investment can exert a positive effect on GDP, trade, and employment growth, especially for lower-income countries.

Suggested Citation

  • Xiaoyang Chen,Maggie & Lin,Chuanhao, 2018. "Foreign Investment across the Belt and Road : Patterns, Determinants, and Effects," Policy Research Working Paper Series 8607, The World Bank.
    • Handle: RePEc:wbk:wbrwps:8607
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    Citations

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    Cited by:

    1. World Bank, 2020. "South Caucasus and Central Asia - The Belt and Road Initiative," World Bank Publications - Reports 34121, The World Bank Group.
    2. Yang Gao, 2022. "The Belt and Road Initiative and cascading innovation in China’s domestic railway ecosystem," Journal of International Business Policy, Palgrave Macmillan, vol. 5(2), pages 236-258, June.
    3. World Bank, 2020. "South Caucasus and Central Asia - The Belt and Road Initiative," World Bank Publications - Reports 34119, The World Bank Group.
    4. Damoah, Kaku Attah & Giovannetti, Giorgia & Marvasi, Enrico, 2022. "Do country centrality and similarity to China matter in the allocation of belt and road projects?," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 660-674.
    5. World Bank, 2020. "South Caucasus and Central Asia - The Belt and Road Initiative," World Bank Publications - Reports 34120, The World Bank Group.
    6. Hongxing Yao & Mohammed Ismail Alhussam & Omar Abu Risha & Bilal Ahmed Memon, 2020. "Analyzing the Relationship between Agricultural FDI and Food Security: Evidence from Belt and Road Countries," Sustainability, MDPI, vol. 12(7), pages 1-20, April.
    7. de Soyres, François & Mulabdic, Alen & Murray, Siobhan & Rocha, Nadia & Ruta, Michele, 2019. "How much will the Belt and Road Initiative reduce trade costs?," International Economics, Elsevier, vol. 159(C), pages 151-164.
    8. Nugent, Jeffrey B. & Lu, Jiaxuan, 2021. "China's outward foreign direct investment in the Belt and Road Initiative: What are the motives for Chinese firms to invest?," China Economic Review, Elsevier, vol. 68(C).
    9. Alena DORAKH, 2022. "Trade and FDI connectivity in Europe: the European Union, Western Balkans and new EU candidate countries," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 13, pages 24-53, December.
    10. Jianhong Qi & Kam Ki Tang & Da Yin & Yong Zhao, 2020. "Remaking China’s Global Image with the Belt and Road Initiative: Is the Jury Out?," Discussion Papers Series 635, School of Economics, University of Queensland, Australia.
    11. Jeffrey B. Nugent & Jiaxuan Lu, 2020. "Does the All-China Federation of Industry and Commerce Align Private Firms with the Goals of the People's Republic of China's Belt and Road Initiative?," Asian Development Review, MIT Press, vol. 37(2), pages 45-76, September.
    12. World Bank, 2020. "From Landlocked to Land-Linked," World Bank Publications - Reports 33891, The World Bank Group.
    13. Ling Fang & Martin Kleimann & Yuan Li & Hans-Jörg Schmerer, 2019. "The Implications of the New Silk Road Railways on Local Development," CESifo Working Paper Series 7923, CESifo.
    14. World Bank, 2020. "South Caucasus and Central Asia - The Belt and Road Initiative," World Bank Publications - Reports 34118, The World Bank Group.
    15. World Bank, 2020. "South Caucasus and Central Asia - The Belt and Road Initiative," World Bank Publications - Reports 34122, The World Bank Group.
    16. Yan Jin & Liyun Zhang & Lu Feng, 2022. "Success Factors of Cross-Border Agricultural Investments for Opium Poppy Alternative Project under China’s Belt and Road Initiative," Sustainability, MDPI, vol. 14(23), pages 1-16, November.
    17. Weldegebriel Abrha Hagoss & Xia Youfu, 2021. "New Economic cooperation of China with Sub-Saharan Africa in Belt and Road Initiative," International Journal of Science and Business, IJSAB International, vol. 5(8), pages 139-160.
    18. Fang, Ling & Kleimann, Martin & Li, Yuan & Schmerer, Hans-Jörg, 2021. "The implications of the New Silk Road Railways on local development," Journal of Asian Economics, Elsevier, vol. 75(C).
    19. Chi Zhang & Ivan T. Kandilov & Mark D. Walker, 2022. "Belt and road initiative and Chinese cross‐border mergers and acquisitions," The World Economy, Wiley Blackwell, vol. 45(6), pages 1978-1996, June.
    20. Weldegebriel Abrha Hagoss & Xia Youfu, 2021. "The Effect of China’s investment on the Business Environment and Economic Growth of Sub-Saharan Africa in perspective of Belt and Road Initiative," International Journal of Science and Business, IJSAB International, vol. 5(8), pages 161-182.
    21. Peng, Hua-Rong & Tan, Xiujie & Managi, Shunsuke & Taghizadeh-Hesary, Farhad, 2022. "Club convergence in energy efficiency of Belt and Road Initiative countries: The role of China’s outward foreign direct investment," Energy Policy, Elsevier, vol. 168(C).

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