Abstract
Political risk assessment has become increasingly important in recent years, especially with the launch of the Belt and Road Initiative (BRI) and with Covid-19 still ravaging the world. This study aims to assess systematically the political risk of BRI countries during the period from 2013 to 2019 based on three big data sets, the Global Database of Events, Language, and Tone (GDELT), China Global Investment Tracker (CGIT), and Armed Conflict Location & Event Data Project (ACLED). It is found that to properly quantify the political risks for BRI countries, the type of events, “Material Conflict”, and a variable characterizing the degree of cooperation/conflicts of the events, the Goldstein Scale, are of critical importance. Based on the chosen type of events and variable, we design a normalized variable to assess political risk of any country in any year so that comparison among different countries can be meaningly made. By decomposing political risk into two components, domestic and international, and examining the spatiotemporal evolution of political risk along the Belt and Road, we find that the sum of the number of BRI countries with the extremely high level and the high level of domestic, international, and (overall) political risk all reached the peak in 2015, and decreased thereafter, and that often the level of domestic political risk along the Belt and Road was higher than the international political risk. It is also found that a strong positive correlation exists between political risk and China’s total investments and construction contracts along the Belt and Road during this period. The implications of this positive correlation are discussed. The analysis presented here may help to promote the sustainable development of BRI, and be extended to examine the risks associated with foreign investments other than BRI projects.
Highlights
Being a critical issue of business environment, risk assessment has been a hot research topic in recent decades
(ii) Are China’s Belt and Road Initiative (BRI) investments and construction contracts largely in BRI countries with low levels of political risk? If not, what are the general characteristics of political risks associated with China’s BRI investments and construction contracts?
In making efforts to answer the above questions, we made six contributions: (1) In trying to resolve why political risk measured by the number of events for “Protest”, “Coerce”, “Assault” and “Fight” in Russia is so high, we find that the basic reason is that the number of the type of events that are chosen for evaluating risks may be correlated with the total number of events that is covered by GDELT for a country, and the number of events can vary substantially for a country over time and among different countries around the globe in a fixed time interval
Summary
Being a critical issue of business environment, risk assessment has been a hot research topic in recent decades. China’s accumulated direct investment to BRI countries has reached USD. 117.31 billion during the period from 2013 to 2019 [8], accounting for 11.60% of gross flow of China’s outward foreign direct investment. Since the launch of BRI, much research has been done to properly interpret BRI [9,10,11,12], carry out case studies of international projects instigated by BRI [13,14], study China’s outward foreign direct investment to BRI countries [15,16,17], and study the influence of BRI on concerned countries or regions [18,19,20,21,22,23,24,25].
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