Does China's “Belt and Road” Initiative promote green total factor productivity growth in countries along the route?

Abstract

Reinforcing the green “Belt and Road” initiative (BRI) provides a basis for building a community with a shared future for mankind. However, research on the green policy effect of BRI lacks a country complexity perspective. In order to expore the green development drivers of countries along the route, this study uses a slack based model (SBM) based on directional distance function (DDF) to evaluates the green total factor productivity (GTFP) of 121 countries from 2007 to 2017. We then use the difference-in-differences (DID) method to investigate the policy effect of BRI on the development of GTFP in countries along the route. In addition, the heterogeneity and internal mechanisms of its effects are also investigated. The results show that the green economic development level of the BRI countries is increasing, but it is significantly lower than the world average and its driving force has time period differences. China's overall green economy development level is relatively low, and it is currently highly dependent on technological progress. Although implementation of the BRI has significantly promoted the development of green economies in countries along the route, especially for countries on the Land Silk Road, it has no obvious requirements for the institutional economic risks to the host country. The BRI will improve the allocation of resources in countries by reducing the competitive advantages of mid-technology manufacturing industries and will improve the trade structure of the host countries by balancing the number of manufacturing exports.