IEMS - Thought Leadership Brief #68

2013-2014 2015-2016 2017-2018 2019FALL 2022 NO.68 / THOUGHT LEADERSHIP BRIEF 2 ASSESSMENT Findings of the Special Issue articles suggest the need for complex integrative thinking about the initiative. We demonstrate that the BRI elicits vastly different patterns of opportunities and challenges as we turn the perspective from policymakers in China, to governments in BRI host countries, and to officials in third countries. Each country typefaces different economic, geopolitical and social upsides and downsides of embarking on the BRI, which help shape the initiative. We will also show that juxtaposing the different perspectives and identifying overlaps between them allows us to develop a more coherent understanding of how BRI policies develop and why they vary across countries. Much of the IB scholarship has mainly focused on three characteristics of the initiative that help explain BRI-related IB patterns. First, IB scholars treat BRI as a formal institutional change in China that has helped motivate Chinese firms to internationalize quickly and extensively. Secondly, scholars have homed in on the state capitalist nature of BRI. The Chinese central and regional governments play a key role in selecting BRI projects and financing them with loans from Chinese state-owned policy banks, commercial banks, and sovereign wealth funds. Of the 191 BRI projects outside of China in the CSIS Reconnecting Asia database, 78 projects were funded exclusively by Chinese sources (Table 1). Thirdly, studies have focused on the geographic concentration of the BRI. Figure 1 shows how the official list of BRI participants has spread geographically over time (Sacks, 2021). As Lewin and Witt (2022) explain in this Special Issue, ‘‘[BRI is,] at its core, a national political initiative that plays out in the domestic and global arenas – economics is the means, but politics is the objective.’’ It is not only China’s political context that shapes the BRI, but also that of BRI host countries and third countries. To illuminate the full ramifications of the BRI, it is important to recognize its kaleidoscopic complexity (Roberts & Lamp, 2021). Every turn of the kaleidoscope lets the pieces shift and reveals distinct perspectives that countries have about the initiative. Chinese Perspective China faces a variety of economic and non-economic societal challenges that it believes can be addressed by promoting IB through the BRI. Yang (2022) focuses on the link between the BRI and innovation. Yang conjectures that the BRI disproportionately boosts the innovation performance of firms that are in close network proximity with BRI firms that implement foreign railroad projects, leading to a cascading innovation effect. He hypothesizes that the knowledge complementarity with BRI firms positively influences a company’s innovation performance, and that this relation is stronger for private firms than for SOEs. Liu and Wang (2022) draw focus to the factors that drive the speed of FDI along the BRI. They find that industry competition boosted the organizational speed of BRI investments, pushing firms to escape China through internationalization. However, both state equity and a firm’s location in an officially designated BRI province reduce the speed of internationalization. Chang, Torres de Oliveira, Chung, and Zheng (2021) find that both formal (e.g., laws and regulations) and informal (e.g., network events) BRI actions by provincial governments boost firm internationalization. In contrast, they find that the status of being listed as a key province targeted for development in the BRI does not boost firm internationalization. These results suggest the need for additional research on the antecedents behind regional variations in BRI policies. Figure 1. Countries that have Joined the BRI by Signing a Memorandum of Understanding, by Period. Table 1. BRI Projects by Origin of Contractor and Funding Source Number of projects Percent of projects that exclusively use Chinese contractors (%) Percent of projects that use both Chinese and non-Chinese contractors (%) Percent of projects that exclusively use non-Chinese contractors (%) Projects funded exclusively by Chinese sources 78 79.5 20.5 0.0 Projects co-funded by Chinese sources 51 66.7 25.5 7.8 Projects not funded by Chinese sources 62 50.0 17.7 32.3 Total 191 66.5 20.9 12.6 Data Source: Reconnecting Asia Database. Authors’ calculations. Data Source: Green Belt and Road Initiative Center

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