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

Faheem Ur Rehman (Graduate School of Economics and Management, Ural Federal University, Ekaterinburg, Russian Federation) (Business School, Ningbo University, Ningbo, China)
Md. Monirul Islam (Graduate School of Economics and Management, Ural Federal University, Ekaterinburg, Russian Federation)
Kazi Sohag (Graduate School of Economics and Management, Ural Federal University, Ekaterinburg, Russian Federation)

International Journal of Emerging Markets

ISSN: 1746-8809

Article publication date: 30 August 2022

Issue publication date: 19 March 2024

459

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.

Keywords

Acknowledgements

Funding: The research funding from the Ministry of Science and Higher Education of the Russian Federation (Ural Federal University project within the Priority-2030 Program) is gratefully acknowledged.

Citation

Rehman, F.U., Islam, M.M. and Sohag, K. (2024), "Does infrastructural development allure foreign direct investment? The role of Belt and Road Initiatives", International Journal of Emerging Markets, Vol. 19 No. 4, pp. 1026-1050. https://doi.org/10.1108/IJOEM-03-2022-0395

Publisher

:

Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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