Economic and Political Impacts of the Belt and Road Initiative on Western Nations in Infrastructure Investment Competitions

Shuhei Nishitateno and Yasuyuki Todo

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: China’s Belt and Road Initiative (BRI) has led to a global proliferation of large-scale infrastructure projects. From the perspective of Western nations, the impacts of BRI infrastructure investments on economic, political, and security interests pose a significant concern. This paper examines the effects of BRI on Japanese overseas infrastructure projects and diplomatic relations between Japan and BRI countries. Utilizing a staggered difference-in-differences research design with a panel dataset covering 138 low- and middle-income countries from 2001 to 2020, we find that the BRI crowded out Japanese infrastructure projects and reduced political leaders’ visits from BRI countries to Japan. These effects are particularly pronounced for nations in the East Asia and Pacific and South Asia regions, where Japan-China competition for infrastructure investments is most intense. Furthermore, we identify the expansion of Chinese overseas infrastructure projects, particularly aid-based rather than debt-financed projects, as a key mechanism driving these effects.

Pages: 47 pages
Date: 2025-04
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:25034

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