Does infrastructural development allure foreign direct investment? The role of Belt and Road Initiatives

Faheem Ur Rehman*, Md Monirul Islam, Kazi Sohag

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

13 Scopus citations

Abstract

Purpose: China's Belt and Road Initiative (BRI) is the most ambitious investment strategy for infrastructural development belonging to the significant potential for stimulating regional economic growth in Asia, Europe and Africa. This study aims to investigate the impact of infrastructure on spurring inward foreign direct investment (FDI) within the purview of human capital, GDP per capita, foreign aid, trade, domestic investment, population and institutional quality in BRI countries. Design/methodology/approach: In doing so, the authors analyze panel data from 2000 to 2019 within the framework of the system generalized method of movement (GMM) approach for 66 BRI countries from Europe, Asia, Africa and the Middle East. Findings: The investigated results demonstrate that aggregate and disaggregate infrastructure indices, e.g. transport, telecommunications, financial and energy infrastructures, are the driving forces in attracting foreign direct investment (FDI) in the BRI countries. In addition, control variables (i.e. institutional quality, human capital, trade, domestic investment, foreign aid and GDP per capita) play an essential role in spurring FDI inflows. Originality/value: The authors’ study uniquely investigates both the pre- (2000–2012) and post- (2013–2019) BRI scenarios using the aggregate and disaggregate infrastructural components from the perspectives of full and clustered sample regions, such as Asia, Europe, Africa and the Middle East. The study provides several policy implications.

Original languageEnglish
Pages (from-to)1026-1050
Number of pages25
JournalInternational Journal of Emerging Markets
Volume19
Issue number4
DOIs
StatePublished - 19 Mar 2024
Externally publishedYes

Bibliographical note

Publisher Copyright:
© 2022, Emerald Publishing Limited.

Keywords

  • Belt and Road Initiative countries
  • FDI
  • GMM
  • Infrastructure

ASJC Scopus subject areas

  • General Business, Management and Accounting

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