Road Initiative Countries Research Articles

The Renminbi as a Trading Currency: Evidence from Selected Countries Participating in the Belt and Road Initiative

AbstractThis paper investigates the effects of the renminbi (RMB) exchange rate on trade prices and volumes in selected Belt and Road Initiative (BRI) countries in comparison with the effects of the US dollar. The stylized facts show that the RMB is underused in bilateral trade with selected BRI countries where intermediate goods dominate. By estimating the level of exchange rate pass‐through and trade volume elasticity, we find that the RMB is significantly correlated with the volume of imports in the sample countries, predicted by the producer currency pricing (PCP) paradigm. We also regroup intermediate and final goods between China and the BRI countries. The evidence shows that dollar fluctuation affects export volumes, reflecting the role of the US as a final goods destination, whereas the RMB exerts a significant impact on the volume of intermediate goods imported from China to the sample countries due to China's important position in global value chains.

Estimating the environmental efficiency, productivity, and shadow price of carbon dioxide emissions for the Belt and Road Initiative countries

This study investigates the environmental efficiency, productivity, and shadow price of carbon dioxide (CO2) emissions of 52 Belt and Road Initiative (BRI) countries for 2005–2016. We consider the case of three inputs (Energy, Labor and Capital), one desirable output (GDP), and one undesirable output (CO2 emissions). The contribution of this paper is that we use the endogenous directional distance function (DDF) to construct environmental efficiency and sequential productivity indicators. The benefit of this approach is that we can both avoid the influence of arbitrary mapping rules and capture the progressive nature of the technology. The results show that the technical efficiency of Eastern Asia increased continuously during the sample period, while those of the other regions did not show a significant trend, indicating that Eastern Asia was catching up with the frontier faster than the rest of the regions. The average shadow prices of CO2 emissions for all the BRI countries increased steadily over the sample period, but the shadow prices of Eastern Europe and Central Asia are much higher than those of the other regions. The average productivity of the BRI countries improved for most periods, mainly because of technological progress. Moreover, the technical changes for the six regions during the sample period are all positive, meaning that technology progress is universal for the BRI countries, especially for those in Eastern Asia. The results of this study have important policy implications for carbon reduction in the BRI countries.

Rule of law and CO2 emissions: A comparative analysis across 65 belt and road initiative(BRI) countries

This article mainly compares different effects of political stability, corruption control and rule of law on CO2 emissions across 65 belt and road initiative countries from 2000-2016. We utilize across low income (LI), lower middle(LM), upper middle(UM) and high income (HI)countries. The results show that institutional factors such as political stability, corruption control and rule of law are highly important in lowering carbon emissions and improving environmental quality. The interacting effect between political stability and rule of law can reduce CO2 emissions. Foreign direct investment (FDI) shows a heterogeneous effect on carbon emissions across different income groups, confirming “Pollution Haven” and “Pollution Halo” hypothesis. Trade openness reduces CO2 emissions in low income and high income countries, which increases CO2 emissions in lower-middle income countries. It is important to enhance the enforcement of environmental law to decrease CO2 emissions.

The degree of internationalization of Chinese Multinationals along the belt and road initiative countries.

This study assesses the degree of internationalization of Chinese firms along the Belt and Road initiative countries. Most of the extant studies of the Belt and Road initiative have been qualitative, and where there have been quantitative studies, they have usually been at the aggregate level, and only a handful have used firm-level data to study initiative. Using a composite measure of the degree of internationalization, DOIBRI, that composed of variables capturing the performance, structural and attitudinal dimensions of internationalization, comparative analysis of State-owned enterprises and privately owned enterprises turned up counter-intuitive results. Firstly, given that state ownership could be positively associated with the degree of internationalization of firms and because of the significance of the Belt and Road initiative, we expected the State-owned enterprises to dominate the DOIBRIrankings. We assessed the firms, and contrary to expectations, privately owned firms had a higher average degree of internationalization. Furthermore, we expected both state-owned enterprises and privately-owned enterprises to have similar levels of psychic dispersion. However, state-owned enterprises were more psychically dispersed. Suggesting that along the belt and road countries, the advantages of state ownership of Chinese multinationals may be attenuated.

Estimating Persistent and Transient Energy Efficiency in Belt and Road Countries: A Stochastic Frontier Analysis

In this paper, we examine the energy efficiency performance of the Belt and Road Initiative (BRI) countries using a newly developed panel data stochastic frontier model that allows for estimation of both persistent and transient efficiency while controlling for random country effects and noise. By this, we contribute to the energy economic literature by providing a complete picture of the level of persistent, transient, and total energy efficiency estimates from a cross country perspective for a panel of 48 BRI countries during the period 1990–2015. Adding that there is little evidence to support energy efficiency convergence in the energy economic literature, we went further to check whether energy efficiency converges in the BRI countries. The results show that (1) persistent efficiencies are much lower than transient efficiencies, suggesting that the energy problem in the BRI countries is more of a structural issue; (2) while energy efficiency varies widely across the countries, high-income countries perform better than the lower-income countries; (3) there is evidence of efficiency convergence and it accelerates when trade increases, but decreases when the industrial sector increases. Based on these findings, we propose some policy implications.

Exploring the relationships among CO2 emissions, urbanization, economic growth, economic structure, energy consumption, and trade along the BRI based on income classification

The Belt and Road Initiative offers interaction among beneficiary countries that fosters economic cooperation spanning education, energy consumption, economic development, environmental change, and quality of life. Of these benefits, carbon dioxide emissions generated by economic growth and related environmental changes have garnered great attention. This paper empirically studies the causal relationships among urbanization, economic growth, energy consumption, economic structure, trade, and carbon dioxide emissions according to an income classification of the Belt and Road Initiative countries. The results from the Westerlund bootstrap cointegration test indicate long-run associations among the variables under study. Estimation from the common correlated effect mean group indicates that a percentage increase in urbanization increases emissions of CO2 by 1.1533% and 1.0454% in lower middle-income and low-income countries, respectively. The elasticity of energy consumption with emissions is higher in low-income countries than in countries in the other three classifications. The Dumitrescu–Hurlin causality test shows a bidirectional causal effect between gross domestic product and emissions in lower middle-, upper middle-, and low-income countries. A bidirectional association was found between urbanization and carbon emissions in low- and lower middle-income countries. These methods take cross-sectional correlations into account in their estimation; hence, some important policy implications can be drawn from the empirical results.

The dilemma of natural disasters: Impact on economy, fiscal position, and foreign direct investment alongside Belt and Road Initiative countries

This paper investigates the damages and population affected by natural disasters based on percentile rankings, and analyzes the impact on the economy, per capita, fiscal balance, and foreign direct investment using novel panel algorithms including; Generalized Method of Moment (GMM), Crossectionally augmented Autoregressive Distributed Lags (CS-ARDL), and Driscoll & Kraay (DK) in Belt and Road initiative countries (B&RIC) over 1990–2018. The results indicate that severe natural disasters have negatively influenced economic growth with an average size of −0.016, which is transmitted to fiscal balance (−0.011) and foreign direct investment (−0.0271) in the long-run. The results also imply that the intensity of severe disasters on the fiscal position of the B&RIC countries is negative with an average effect of −0.011; however, the trade-openness, FDI, and economic activities support to improve the fiscal balance in the long-run. The outcomes of the study further revealed that foreign direct investment is more elastic in response to natural disasters in these countries. Therefore, it is recommended that the policymakers in B&RI countries should integrate the economic impacts of natural disasters in long-term economic planning. This would help the policymakers for better fiscal decisions, attracting FDI inflows and preparedness aftermath of natural disasters.

The impact of scholarship inflows on achieving food security: what can Bayesian networks tell us?

ABSTRACT This study uses Bayesian networks besides the regression model to analyse the relationship between scholarship inflows and food security in 46 of Belt and Road Initiative countries. Our main contributions are: 1 – Analysing the relationship between scholarship inflows and food security. 2 – Using Bayesian networks to analyse this relationship. 3 – Comparing Bayesian networks results with regression model results. The regression model resulted that scholarship inflows have a significant positive effect on food security with small coefficient value. On the other hand, Bayesian networks showed that food security conditionally depends on scholarship inflows given the percentage of agricultural value add of GDP. In addition, Bayesian networks had higher prediction accuracy than the regression model. Whereas the constraint-based approach of network structure learning showed the highest prediction power, the information theory measures of network quality, including Entropy and Mutual Information, revealed better performance than Bayesian measures. Finally, we concluded that using Bayesian networks beside linear models could enhance our results.

Has China’s Oil Investment in Belt and Road Initiative Countries Helped Its Oil Import?

Energy cooperation is an important part of the Belt and Road Initiative (BRI). As China’s investment in One Belt One Road countries has increased substantially, a natural question is whether the investment in the BRI countries can contribute to its oil import since it is the most critical part of the national energy security strategy. By employing a dataset that includes the oil import from BRI countries and the oil-related investment in these countries, along with other control variables, an econometric analysis is conducted to investigate the relationship between these two variables. The estimation results provide supporting evidence for the hypothesis that China’s oil investment in BRI countries has helped enhance its oil security. Specifically, investment in BRI countries increases the oil import volume from the host country and diversifies China’s sources of imports. Further analysis also reveals that the effects do not differ by investment mode, e.g., greenfield or mergers and acquisitions (M&A).

Natural resources, tourism development, and energy-growth-CO2 emission nexus: A simultaneity modeling analysis of BRI countries

The empirical investigation of tourism and natural resources in energy-growth-CO2 emission nexus is carried out in simultaneous equations framework for 51 “Belt & Road Initiative (BRI) countries” over 1990–2016. The dependent variables in four systems of equations are income, CO2 emission, energy use, and tourism development index. Empirics from difference and system GMM diagnosed the feedback effect between energy use and income; also validated energy push CO2 emission in conjunction with EKC for BRI countries. The results supported bidirectional causality between tourism and income; moreover, tourism push emission hypothesis validated for BRI countries. On the other hand, natural resources are contributing to tourism development, energy use, and CO2 emission in BRI countries. Additionally, natural resources are contributing negatively and significantly to income, thus obeying the natural resource curse phenomenon. So, the allocation of funds on green infrastructure are required to improve the environmental quality and benefit through green tourism. Moreover, the implementation of conservation policies on “natural resources” can help the GDP growth, environmental quality, and tourism sector on a single platform.

The empirical relationship between environmental degradation, economic growth, and social well-being in Belt and Road Initiative countries.

This study used principal component analysis (PCA) to develop composite indexes for economic growth, environmental degradation, and social well-being. The mutual relationship between these indexes was empirically tested using a panel vector autoregressive model based on a generalized method of moment approach (PVAR-GMM), and robustness was determined with Driscoll and Kraay regression. To this end, we gathered the data for 36 Belt and Road Initiative (BRI) countries over the period 1995-2016. Using a multivariate framework, the empirical results showed that environmental degradation and social well-being have a significant positive impact on the economic growth index. The social well-being index and economic growth are contributors to environmental degradation. Similarly, economic growth, in the long run, improves social well-being. The results confirm bidirectional causality between economic growth and environmental degradation. Another bidirectional causal relationship was found between economic growth and social well-being. Further, causality exists from social well-being to environmental degradation, but not vice versa. The analysis of the impulse response function exhibited the presence of the environmental Kuznets curve phenomenon in BRI countries. Moreover, the results of variance decomposition suggested that a shock in one index spills over to other indexes simultaneously. The study suggests that policymakers should consider social well-being and environmental degradation in economic activity to achieve sustainable development goals.

How does income inequality affect energy efficiency? Empirical evidence from 33 Belt and Road Initiative countries

At present, income distribution and environmental pollution are serious issues faced by the Belt and Road Initiative (BRI) countries, and exploring the impact of income inequality on energy efficiency is meaningful for the sustainability of BRI countries. Using the panel data of 33 BRI countries from 2000 to 2016, we first evaluate the energy efficiency of the countries by dynamic DEA model, and then adopt the Tobit regression model to investigate the nonlinear effect of income inequality on energy efficiency. The results suggest that, first, during 2000–2016, the overall energy efficiency of 33 BRI countries is relatively low, falling to 0.38, while the overall energy efficiency of high-income BRI countries is much higher than that of the middle-and low-income BRI countries. Second, the average energy efficiency of the BRI countries has declined since year 2013. Third, there is an inverted “U”-type effect of income inequality on energy efficiency in the whole sample, but the impact of income inequality on energy efficiency is heterogeneous for countries at different income levels. Specifically, in high-income BRI countries, income inequality shows a “U”-type effect on energy efficiency, while in middle-and low-income BRI countries, the relationship between income inequality and energy efficiency is an inverted “U”-type. Moreover, economic growth positively impacts the energy efficiency, while industrialization and energy structure negatively influence the energy efficiency.

A global analysis of CO2 and non-CO2 GHG emissions embodied in trade with Belt and Road Initiative countries

ABSTRACT Introduction: The Belt and Road Initiative (BRI) is an important cooperative framework that increasingly affects the global economy, trade, and emission patterns. However, most existing studies pay insufficient attention to consumption-based emissions, embodied emissions, and non-CO2 greenhouse gases (GHGs). This study constructs a GHG emissions database to study the trends and variations in production-based, consumption-based, and embodied emissions associated with BRI countries.Outcome: We find that the per capita GHG emissions of BRI countries are lower than the global average but show significant variation within this group. We also find that trade-embodied emissions between BRI countries and China are growing. As a group, BRI countries are anet exporter of GHGs, with a global share of net export emissions of about 20%. In 2011, nearly 80% of GHG export emissions from BRI countries flowed to non-BRI countries, and nearly 15% flowed to China; about 57% of GHG import emissions were from non-BRI countries, and about 38% were from China.Conclusion: Therefore, this study concludes that the BRI should be used to coordinate climate governance to accelerate and strengthen the dissemination and deployment of low-emissions technologies, strategies, and policies within the BRI so as to avoid a carbon-intensive lock-in effect.

Geopolitical risk and shipping firms’ capital structure decisions in Belt and Road Initiative countries

ABSTRACT Geopolitical uncertainty can disrupt global supply chains and increase frictional costs in international trade, thus affecting firm-level decisions. This study investigates the role of geopolitical risk (GPR) in the financial leverage choices of shipping firms from Belt and Road Initiative (BRI) countries and those from non-BRI countries. The current paper uses panel data methodology and considers 118 globally-listed shipping firms for the period 1987–2017. The results indicate that shipping firms lower their financial leverage as GPR rises. However, this negative effect is observed in shipping firms from BRI countries, but not in those from non-BRI countries. Moreover, the impact of GPR on BRI firms’ financing decisions is more than twice that of the global GPR. This result remains unchanged when the relevant macroeconomic factors are controlled. The negative effect of GPR on capital structure decisions is more pronounced during periods of high freight rates, high economic growth, and tranquillity. This study can serve as input for policy formulation to facilitate shipping firms operating in BRI countries.

Local integration and co‐evolution of internationalizing Chinese firms

AbstractThis study investigates the integration of internationalizing Chinese firms into local host markets. We explore the market‐driven investment of a new wave of Chinese private and local state‐owned firms in Australia since 2012, which has replaced the initial large‐scale investment in resources by central state‐owned enterprises. Using an in‐depth analysis of nine Chinese firms operating in various sectors of the Australian market, we argue that market integration, adaptation, and bilateral institution‐building through co‐evolution and empowerment of local subsidiaries of Chinese multinational enterprises results in entrepreneurial autonomy and characterizes a new generation of Chinese investors. We propose that Chinese multinational subsidiaries have transferred domestic practices to the Australian market and have reconfigured domestic and host market resources to gain a competitive advantage in their original investment industry and new industries. Our study advances middle‐range theory building and provides a practical understanding of the strengths and weaknesses of Chinese investors, their potential to disrupt local markets, and their responsiveness to market‐oriented institutional guidance. The results of this study suggest that the bilateral institution‐building and resource reconfiguration capabilities of Chinese enterprises can be transferred to other developed and developing markets, including Belt and Road Initiative countries.

Emission reduction effects of the green energy investment projects of China in belt and road initiative countries

ABSTRACT Investment and construction of power infrastructure are directly related to the achievement of sustainable development goals. China's trade and investment with BRI (Belt and Road Initiative) countries have maintained growth trend. The development and construction of these investment projects certainly have impacts on the economic development mode and sustainable development goals of the countries. On collecting the basic information of the renewable energy investment projects, this paper compares and calculates the current power technology structure and grid emission factors of the host countries, and analyses the carbon emission level of electricity generation from the perspective of the whole life cycle. Making it as the benchmark, this paper also analyzes the current China's invested wind and solar energy projects and the carbon emission reduction benefits to the host country. The results show that at present, China has about 36 renewable energy investment projects in BRI countries, with an installed capacity of 15.75GW (China as the project owner or investor), and achieve at least 48.69M tCO2 emission reduction. This shows that China's effective investment and implementation of the green projects will provide a strong impetus for the energy transformation and the improvement of their energy security in BRI countries.

Analyzing the Relationship between Agricultural FDI and Food Security: Evidence from Belt and Road Countries

This study analyzes the relationship between agricultural foreign direct investment (FDI) and food security on Belt and Road Initiative (BRI) countries in a panel framework over the period 2006–2015 using correlation analysis, the specific-effect model, and the 2SLS technique. The study aims to: first, analyze the correlation between agricultural FDI and food security for each country, individually; then, investigate whether there is a direct relationship, using the specific-effect model. Finally, by taking one step further, this study uses the 2SLS method to determine whether there is an indirect relationship through agricultural productivity. Our results show that the sampled countries have clear differences in the direction of the relationship between food security and agricultural FDI. But, in general, the agricultural FDI has a positive direct and indirect effect on food security; this effect is seen clearly when the country attracts agricultural FDIs steadily.

The impact of natural resource depletion on energy use and CO2 emission in Belt & Road Initiative countries: A cross-country analysis

We employ STIRPAT (stochastic impact of regression on population, affluence, and technology) model to investigate the impact of natural resource depletion on energy use and carbon dioxide emissions for a panel of 56 “Belt & Road Initiative” (BRI) countries over 1990–2014. We utilize the Augmented Mean Group (AMG) panel estimator and Common Correlated Effects Mean Group (CCEMG) estimator for estimating our model. The results indicate that increasing natural resource depletion increases CO2 emissions and energy use, which shows that a 1% increase in natural resource depletion for our sample of BRI countries will increase CO2 emissions and energy use by 0.0286% and 0.0117%, respectively. To check the causal relationship among our variables, we employ the VECM Granger causality test. The causality results underscore feedback hypothetical links among CO2 emissions, energy use, economic growth, natural resource depletion, urbanization, and trade openness in the long run. Our results show a significant cross-sectional dependence and heterogeneity.

Railway and road infrastructure in the Belt and Road Initiative countries: Estimating the impact of transport infrastructure on economic growth

Abstract China’s Belt and Road Initiative (BRI) is one of the most ambitious infrastructure investment efforts in history, representing great potential for stimulating regional economic growth in Asia, Europe and Africa. This study collects cross-country panel data from 2007 to 2016 and investigates the impact of transport infrastructure (railway and road) on the economic growth in the BRI countries. First, a spatial-temporal characteristics analysis of transport infrastructure and economic growth is presented. Then, the global Moran’s I and the local Moran scatterplot are employed to test for possible spatial autocorrelations. Finally, both static and dynamic spatial models are utilized to empirically examine the impact of transport infrastructure on economic growth from the national and regional perspectives. The estimation results at the national level reveal that the transport infrastructure in the BRI countries plays an essential role in facilitating economic growth. Moreover, this study finds significantly positive spatial spillover effects of economic growth in the categories of geographical distance, economic distance, cultural distance, and institutional distance spatial weight matrices, i.e., shorter geographical distances and economic, cultural and institutional similarities among the BRI countries lead to mutual economic growth. The estimation results at the regional level indicate that the spatial spillover effects of transport infrastructure are significantly negative in East Asia-Central Asia and the Commonwealth of Independent States and in South Asia. On the contrary, the positive spatial spillover effect of transport infrastructure on economic growth is most pronounced in Central and Eastern Europe. This indicates the polarization effect in the initial stage of the lagging transport infrastructure and the diffusion effects after the transport infrastructure is mature. This study is valuable because it examines the impact of transport infrastructure on economic growth in the BRI countries. In addition, two policy suggestions for driving the regional economy in the BRI countries are given.

Effect of urbanization and international trade on CO2 emissions across 65 belt and road initiative countries

This paper mainly investigates the impact of urbanization and international trade on CO2 across 65 Belt and Road Initiative (BRI) Countries from 2000 to 2016. The non-linear nexus between urbanization and CO2 emissions is explored through panel quantile regression. Different effects of exports and imports on CO2 is analyzed and compared across different income groups. 2SLS (2-stages least square) regression is employed to handle the endogeneity issue. The results confirmed an inverted U-shaped relationship between urbanization and CO2 emissions only in high income group, which is consistent with the theory of ecological modernization. EKC (Environmental Kuznets Curve) hypothesis is confirmed only in upper-middle and high income groups. Foreign direct investment increased CO2 emissions, which supports “pollution haven” hypothesis. Exports decreased carbon emissions in low and high income countries, while increased it in lower-middle countries. Imports increased carbon emissions in low income countries, while decreased it in middle and high income countries. Our findings suggest that promoting industry agglomeration during urbanization and enhancing voluntary disclosure of environmental information of FDI firms can reduce carbon emissions.