Third-country investment effects of the belt and road initiative: evidence from China’s overseas direct investment

Jian Chen (), Xiao-qin Dong, Wei Li and Di Zhao
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Jian Chen: Southeast University
Xiao-qin Dong: Southeast University
Wei Li: Southeast University
Di Zhao: Jinling Institute of Technology

Empirical Economics, 2025, vol. 69, issue 2, No 13, 978 pages

Abstract: Abstract Using the difference-in-difference (DID) model, this empirical study constructs the treated group and the control group based on a series of subgroup observations and explores the third-country investment effect of the Chinese-led Belt and Road Initiative (BRI) from 2003 to 2019. The findings show that while the BRI enhances China’s outward direct investment (ODI) in Belt and Road (B&R) member countries, this institutional arrangement adversely affects China’s ODI in non-B&R nations. Further heterogeneity analysis reveals varying effects of the BRI on third-country ODI. A promotional effect is more pronounced in developed Western European nations, whereas a significant suppressive impact is observed on Chinese ODI in African nations. Notably, lower-ranked B&R members exert a suppressive influence on third-country investments in non-B&R nations under the BRI. Our study offers valuable insights for accurately assessing the third-country investment implications of the BRI and devising an optimal strategy for China’s global ODI.

Keywords: Belt and Road Initiative; Outward direct investment; Third-country investment effects; Crowding out; Crowding in (search for similar items in EconPapers)
JEL-codes: F21 F42 O19 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s00181-025-02743-y

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