Can the Belt and Road Initiative Promote China’s Corporate Innovation？

Abstract

In 2011—2013, China’s GDP growth rate continued to decline, and economic development showed an L-shaped growth trend. China’s economic development has stepped into a new normal stage. Under the new normal, the problems brought about by China’s reform and opening up, especially the development model of expanding by volume” in the past two decades, have gradually become more prominent. The Chinese economy has begun to face increasingly urgent development bottlenecks while achieving rapid growth. In this context, Chairman Xi Jinping proposed the construction of the Silk Road Economic Belt” and the 21st Century Maritime Silk Road” in 2013, and the Belt and Road Initiative was officially launched. In recent years, the economic effects of the Belt and Road Initiative have received much attention, but the existing literature is mostly limited to the macro level. The research on the Belt and Road Initiative affecting micro-enterprise innovation is still blank. In view of this, the paper attempts to study the microscopic effects of the Belt and Road Initiative on individual enterprises from the perspective of enterprise innovation. The Belt and Road Initiative can be regarded as a quasi-natural experiment. As far as China is concerned, its impact on various provinces is not the same. This provides an opportunity for our research to use difference-in-difference model（DID）. Therefore, the paper drawing on the quasi-natural experimental environment formed by the Belt and Road Initiative, based on the 2012—2017 China A-share listed company data, empirically examines the impact of the Belt and Road Initiative on Chinese enterprise innovation by DID model. Compared with non-key-affected provinces（municipalities）, the Belt and Road Initiative has significantly improved the innovation level of key enterprises in key provinces. Further, from the perspective of outward foreign direct investment（OFDI）and environmental uncertainty, we examine the role of the Belt and Road Initiative in influencing the innovation of Chinese enterprises. The results show that the promotion effect of the Belt and Road Initiative on Chinese enterprise innovation depends heavily on enterprises’ OFDI, and the mediating effect of environmental uncertainty is not obvious. In addition, we conduct a subsample regression analysis based on the firm size, ownership category, and capital intensity. The results show that the Belt and Road Initiative has a significant incentive effect on large companies, state-owned enterprises, and capital-intensive companies. This means that the Belt and Road Initiative can not only alleviate the drag-in effect of state-owned enterprises on economic growth, but also help China’s industrial upgrading and value chain climb from the level of technological innovation. The marginal contributions of this paper may be: First of all, this paper examines the economic effects of the Belt and Road Initiative from the micro perspective of enterprise innovation, which not only enriches the relevant literature on the empirical research of the Belt and Road Initiative, but also makes up for the research gap of the Belt and Road Initiative and enterprise innovation. In addition, this paper also enriches the related research on the macro-influence factors of enterprise innovation, and provides a new perspective for the empirical research of the innovation theory. Finally, this study gives important policy implications to the government and enterprises, and provides theoretical support for the follow-up strategic deployment of the Belt and Road Initiative.