Measuring the Benefits of the “One Belt, One Road” Initiative for Manufacturing Industries in China

Jianing Hou,Shih-Chih Chen,De Xiao

doi:10.3390/su10124717

Abstract

China has shifted its focus from export-led growth to technology-driven growth. The “One Belt, One Road” initiative (OBOR) is aimed at promoting economic integration with the rest of the world that might boost China’s ability to upgrade its manufacturers. We evaluate the impact of the OBOR initiative on the manufacturing industries of China. In other words, we examine whether the greater openness entailed by the initiative has been a catalyst for upgrading China’s export portfolio. We demonstrate that the proposition has been such a catalyst formally and adduce some empirical support for the proposition by using a panel of the top 80 exporting countries in the world during the period from 2002–2017 to evaluate the impact of the economic integration brought by the OBOR in terms of upgrades to Chinese manufacturers. Meanwhile, when domestic R&D generates knowledge spillover, the benefits of greater openness become partly indeterminate, thus counterfactual analysis was adopted to preclude potential endogeneity. By relating the values of exports at the two-digit harmonized system level to data on sectors to conduct integration within global production networks, we find that the greater openness brought by the OBOR initiative has actively increased manufacturing complexity and facilitated industrial upgrading in China.

Highlights

This paper proposes to measure the impact of the “One Belt, One Road” (OBOR) initiative on the manufacturing complexity and upgrading of China
We notice that one of the difficulties in fulfilling the aim of this study is proving that there is no endogenous relationship between the objects of study, that is, the greater openness and the upgrading of domestic manufacturing, since, as Helpman [1] points out: “ technology affects trade, and trade affects the evolution of technology”
To clarify the rationale behind the study, we propose that attracting economic integration with multinationals can affect the production capacity and composition of exports through two channels: The first is by engaging in the production of more sophisticated and high-tech goods than those previously produced by the host country [8]

Summary

Introduction

This paper proposes to measure the impact of the “One Belt, One Road” (OBOR) initiative on the manufacturing complexity and upgrading of China. To examine whether the greater openness entailed by the initiative has been a catalyst for upgrading China’s export portfolio, we use information on the exports of 80 countries and Chinese manufacturing industries during the 2002–2017 period. As economics are driven by common factors, information on other countries not subject to the Chinese policy could be used to construct a counterfactual of China for comparing an experimental result of policy [2]. This counterfactual method would be adopted for an evaluation of the “One Belt, One Road” policy. T[8h]e. toTthael etxoptaolrtesxfproormtsCfhroinma Cinhcirneaasiendcrferaosmed8fbroilmlion bUiSll$ioinn U19S7$9 itno 1m9o79retothmano2re.2tthrailnlio2n.2UtrSi$lliionn2U01S7$[i9n]. 2In01470[y9]e.arIsno4f0reyfeoarrms oafnrdefdoervmelaonpdmdeenvt,elCohpimnaenht,aCs hgirnoawhnasitgsrsohwanreitosfshthaerewoofrtlhdemwaorrkldetmfraormketlefsrosmthlaenss1thpaenrc1enptertcoen11t tpoer1c1enpter(Fceignut r(eF1ig).uTrehi1s)p. hTehniosmpehneanloemxpenoartl eexxppaonrstioexnphaanssbioenenhcaasubseeednbcyatuhseeddrbamy athtiecadllryamchaatnicgailnlyg cchoamnpgoinsigticoonmopfotshietioCnhoinfetsheeeCxhpionretsbeaesxkpeot,rtwbhaisckheth,aws hsihcihfthedasaswhiafytefdroamwapyrifmroamrypprirmodauryctpsrtoodwuacrtds tmowanaurdfamctuanreudfagcotuordesd[g1o0]o.dIsn[1fa0c]t.,Inthfeacsth,atrhee oshf amreanouf fmacatnuurefadctguoroeddsgionodCshiinnaC’shienxap’soretxbpaosrkt ebtanskoewt nexocweeedxsce8e9d%s, 8w9h%ic,hwishiwchellisabwoevlleathbeovweotrhlde awvoerrladgeavoefr7a0g%e [o1f07].0I%n s[h10o]r.t,Itnheshinotret,gtrhateioinntoefgdraotmioenstoicf dmoamneusftaicctmurainnugfwacittuhrinintghwe gitlhoibnatlhperogdloubcatliopnrondeutwctoiornk hnaestwaollrokwheads Calhloinwaetdo Cbehcinoma teoabmecaojmoreeaxpmoarjtoerr einxpthoretewroirnldthme awrokreltd. market.

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