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Third-country investment effects of the belt and road initiative: evidence from China’s overseas direct investment

Author

Listed:
  • Jian Chen

    (Southeast University)

  • Xiao-qin Dong

    (Southeast University)

  • Wei Li

    (Southeast University)

  • Di Zhao

    (Jinling Institute of Technology)

Abstract

Using the difference-in-difference (DID) model, this empirical study constructs the treated group and the control group based on a series of subgroup observations and explores the third-country investment effect of the Chinese-led Belt and Road Initiative (BRI) from 2003 to 2019. The findings show that while the BRI enhances China’s outward direct investment (ODI) in Belt and Road (B&R) member countries, this institutional arrangement adversely affects China’s ODI in non-B&R nations. Further heterogeneity analysis reveals varying effects of the BRI on third-country ODI. A promotional effect is more pronounced in developed Western European nations, whereas a significant suppressive impact is observed on Chinese ODI in African nations. Notably, lower-ranked B&R members exert a suppressive influence on third-country investments in non-B&R nations under the BRI. Our study offers valuable insights for accurately assessing the third-country investment implications of the BRI and devising an optimal strategy for China’s global ODI.

Suggested Citation

  • Jian Chen & Xiao-qin Dong & Wei Li & Di Zhao, 2025. "Third-country investment effects of the belt and road initiative: evidence from China’s overseas direct investment," Empirical Economics, Springer, vol. 69(2), pages 951-978, August.
    • Handle: RePEc:spr:empeco:v:69:y:2025:i:2:d:10.1007_s00181-025-02743-y
    DOI: 10.1007/s00181-025-02743-y
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    Keywords

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    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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