Impact of the belt and road initiative on trade status and FDI attraction: A local and global network perspective

Abstract

The Belt and Road Initiative (BRI) is attracting an increasing number of countries to join it for financial support and development opportunities. However, have the countries had higher trade status and been more attractive to foreign direct investment since joining the BRI? Have they cooperated more intensively with other countries? To answer the questions, based on two mixed network centrality measures, we utilize a difference-in-differences approach to examine the impact of the BRI on trade status and FDI attraction using a sample of 93 countries during 2008–2018 from a local and global network view. In multi-dimension characteristic and dynamic evolution analysis, we capture distinct network changes after the BRI. Our empirical results indicate a positive BRI effect on trade status and FDI attraction of BRI countries. From a local network view, we find the BRI effect on trade status requires a longer period, while the BRI effect on FDI attraction fades over time. We document a whole-period positive BRI effect on trade status and FDI attraction from a global network view. Moreover, the pioneering role and mediating effect of FDI attraction are identified. Last, we also find that the BRI alleviates the trade deficit and domestic capital flight.