Evaluating India’s FDI as a nonparticipant in the Belt and Road Initiative: synthetic control method analysis

Eman Elish and Hossameldin Ahmed

Journal of Chinese Economic and Foreign Trade Studies, 2024, vol. 18, issue 1, 1-23

Abstract: Purpose - The Belt and Road Initiative (BRI) was launched in 2013 and implemented the following year, marking 11 years since its inception. During this time, numerous research papers have been published that analyse the initiative’s objectives, targets and potential outcomes. This study aims to assess India’s resilience in joining the BRI by examining its net foreign direct investment (FDI) compared to a counterfactual scenario involving participation in the initiative. Design/methodology/approach - The synthetic control method (SCM) will be used using a panel of 27 countries from 1990 to 2021. Findings - The findings reveal that India’s FDI trajectory has decreased compared to that of synthetic India constructed from BRI member countries. Research limitations/implications - This research outcome can assist India and other nations that are contemplating joining the BRI to systematically evaluate the potential political and economic risks and benefits associated with the initiative. This evaluation can guide individual decision-making processes regarding the BRI on a case-by-case basis and with other outcomes that are deemed viable to each country. Originality/value - This research is distinct from other studies because it uses a novel SCM analysis, which is a quasi-experimental technique that assesses actual outcomes rather than predicting them, as in conventional regression models. In addition, previous research has primarily focused on the political aspects of the initiative; however this study focuses on the economic aspect of the BRI by evaluating its impact on FDI.

Keywords: Belt and Road Initiative; Synthetic control method; Foreign direct investment (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jcefts:jcefts-03-2024-0020

DOI: 10.1108/JCEFTS-03-2024-0020

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