IDEAS home Printed from https://ideas.repec.org/a/tpr/asiaec/v22y2023i1p62-81.html
   My bibliography  Save this article

The Belt and Road Initiative: Economic Causes and Effects

Author

Listed:
  • Fredrik Sjöholm

    (Research Institute of Industrial Economics (IFN) Stockholm, Sweden)

Abstract

Chinese investment abroad has grown significantly in connection with the Belt and Road Initiative (BRI). This paper tries to answer two questions: First, what considerations gave birth to the BRI? And second, what are the project's economic effects in terms of capital flows and international trade? It is found that the project is above all a way to deal with large surplus capacity in China's capital-intensive industries, to increase growth in relatively poor regions of the country, and to secure a supply of energy and raw materials. For other countries involved in the project, BRI investments are a means to increase production and international trade. International trade and foreign direct investment have been positively affected, although to a limited extent. Finally, there are concerns that lack of transparency in Chinese lending may lead to increased corruption, and that some countries will face financial difficulties.

Suggested Citation

  • Fredrik Sjöholm, 2023. "The Belt and Road Initiative: Economic Causes and Effects," Asian Economic Papers, MIT Press, vol. 22(1), pages 62-81, Winter/Sp.
  • Handle: RePEc:tpr:asiaec:v:22:y:2023:i:1:p:62-81
    DOI: 10.1162/asep_a_00861
    as

    Download full text from publisher

    File URL: https://doi.org/10.1162/asep_a_00861
    Download Restriction: Access to PDF is restricted to subscribers.

    File URL: https://libkey.io/10.1162/asep_a_00861?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Horn, Sebastian & Reinhart, Carmen M. & Trebesch, Christoph, 2021. "China's overseas lending," Journal of International Economics, Elsevier, vol. 133(C).
    2. Chen, Jiachun & Chen, Xia & Hou, Qingsong & Hu, May, 2021. "Haste doesn't bring success: Top-down amplification of economic growth targets and enterprise overcapacity," Journal of Corporate Finance, Elsevier, vol. 70(C).
    3. Yuan Li & Kierstin Bolton & Theo Westphal, 2018. "The effect of the New Silk Road railways on aggregate trade volumes between China and Europe," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 16(3), pages 275-292, July.
    4. Baniya, Suprabha & Rocha, Nadia & Ruta, Michele, 2020. "Trade effects of the New Silk Road: A gravity analysis," Journal of Development Economics, Elsevier, vol. 146(C).
    5. Isaksson, Ann-Sofie & Kotsadam, Andreas, 2018. "Chinese aid and local corruption," Journal of Public Economics, Elsevier, vol. 159(C), pages 146-159.
    6. Bastos, Paulo, 2020. "Exposure of belt and road economies to China trade shocks," Journal of Development Economics, Elsevier, vol. 145(C).
    7. Carrai, Maria Adele, 2021. "Adaptive governance along Chinese-financed BRI railroad megaprojects in East Africa," World Development, Elsevier, vol. 141(C).
    8. Chen, Maggie Xiaoyang & Lin, Chuanhao, 2020. "Geographic connectivity and cross-border investment: The Belts, Roads and Skies," Journal of Development Economics, Elsevier, vol. 146(C).
    9. Junsen Zhang, 2021. "A Survey on Income Inequality in China," Journal of Economic Literature, American Economic Association, vol. 59(4), pages 1191-1239, December.
    10. 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).
    11. Julie T. Miao, 2021. "Understanding the soft power of China’s Belt and Road Initiative through a discourse analysis in Europe," Regional Studies, Regional Science, Taylor & Francis Journals, vol. 8(1), pages 162-177, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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).
    2. 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.
    3. Zhang, Yun & Liu, Yun & Zhang, Yifei & Chen, Xin, 2022. "Globalization blueprint and households’ fintech debt: Evidence from China’s One Belt One Road initiative," International Review of Economics & Finance, Elsevier, vol. 79(C), pages 38-55.
    4. Linda Calabrese & Rhys Jenkins & Lorena Lombardozzi, 2024. "The Belt and Road Initiative and Dynamics of Structural Transformation," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 36(3), pages 515-547, June.
    5. Liu, Zhigao & Schindler, Seth & Liu, Weidong, 2020. "Demystifying Chinese overseas investment in infrastructure: Port development, the Belt and Road Initiative and regional development," Journal of Transport Geography, Elsevier, vol. 87(C).
    6. Wang, Banban & Lin, Ping, 2022. "Whether China's overseas energy infrastructure projects dirtier or cleaner after the belt and road initiative?," Energy Policy, Elsevier, vol. 166(C).
    7. 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.
    8. Marson, Marta & Savin, Ivan, 2022. "Complementary or adverse? Comparing development results of official funding from China and traditional donors in Africa," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 189-206.
    9. Ouyang, Shanshan & Li, Yanxi & Wu, Haowen & Zhao, Heng & Xu, Runxiang, 2023. "Structure and evolution of the greenfield FDI network along the belt and road," Research in International Business and Finance, Elsevier, vol. 64(C).
    10. Sha Fan, 2023. "Does the Belt and Road Initiative Promote Bilateral Trade? An Empirical Analysis of China and the Belt and Road Countries," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 15(2), pages 190-214, May.
    11. Jackson, Karen & Shepotylo, Oleksandr, 2021. "Belt and road: The China dream?," China Economic Review, Elsevier, vol. 67(C).
    12. Mau, Karsten & Seuren, Rosalie, 2020. "One Belt, One Road, One Way?," Research Memorandum 024, Maastricht University, Graduate School of Business and Economics (GSBE).
    13. Martorano, Bruno & Metzger, Laura & Sanfilippo, Marco, 2020. "Chinese development assistance and household welfare in Sub-Saharan Africa," World Development, Elsevier, vol. 129(C).
    14. Koffi Dumor & Li Yao & Jean-Paul Ainam & Edem Koffi Amouzou & Williams Ayivi, 2021. "Quantitative Dynamics Effects of Belt and Road Economies Trade Using Structural Gravity and Neural Networks," SAGE Open, , vol. 11(3), pages 21582440211, July.
    15. Lingduo Jiang & Guofeng Zhang & Hang Zhang, 2023. "The role of the Belt and Road Initiative: New opportunity for Chinese exporters?," The World Economy, Wiley Blackwell, vol. 46(6), pages 1609-1647, June.
    16. Gatien Bon & Gong Cheng, 2021. "Understanding China's role in recent debt relief operations: A case study analysis," International Economics, CEPII research center, issue 166, pages 23-41.
    17. Chen, Maggie Xiaoyang & Lin, Chuanhao, 2020. "Geographic connectivity and cross-border investment: The Belts, Roads and Skies," Journal of Development Economics, Elsevier, vol. 146(C).
    18. Gatien Bon & Gong Cheng, 2020. "China’s debt relief actions overseas and macroeconomic implications," EconomiX Working Papers 2020-27, University of Paris Nanterre, EconomiX.
    19. Samuel Brazys & Krishna Chaitanya Vadlamannati, 2021. "Aid curse with Chinese characteristics? Chinese development flows and economic reforms," Public Choice, Springer, vol. 188(3), pages 407-430, September.
    20. Courage Mlambo, 2022. "China in Africa: An Examination of the Impact of China’s Loans on Growth in Selected African States," Economies, MDPI, vol. 10(7), pages 1-27, June.

    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tpr:asiaec:v:22:y:2023:i:1:p:62-81. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kelly McDougall (email available below). General contact details of provider: https://direct.mit.edu/journals .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.