Influence of Economic Openness on Total Factor Productivity: Evidence from China’s Belt and Road Initiative

Maoguo Wu () and Xierui Han
Additional contact information
Maoguo Wu: SILC Business School, Shanghai University, Shanghai 201899, China
Xierui Han: SILC Business School, Shanghai University, Shanghai 201899, China

Sustainability, 2022, vol. 14, issue 20, 1-24

Abstract: The impact of international trade and export-oriented policies on economic growth has been an important topic. Based on an evaluation of China’s Belt and Road Initiative (BRI), this study provides new evidence of the positive causal link between increasing openness and long-term economic growth. Specifically, this study evaluates the BRI’s impact on 18 key provinces in China, with a focus on total factor productivity (TFP). Utilizing a panel dataset of 284 prefectural-level cities from 2007 to 2018, we examine the causal relationship between the BRI and TFP in a difference-in-differences framework. We apply the five-pronged approach to the BRI to explore the impact mechanism and examine heterogeneity in the effect in terms of geographic location and local government efficiency. We find that the BRI significantly promotes TFP in key provinces; it increases TFP through unimpeded trade, infrastructure connectivity, technical efficiency, and technological progress. The BRI promotes TFP in key coastal provinces belonging to the Maritime Silk Road while having a relatively limited impact on the other key provinces belonging to the Silk Road Economic Belt. This study has policy implications for promoting the BRI in China. It recommends that the government collaborates with firms and financial institutions in the construction of infrastructure.

Keywords: belt and road initiative; total factor productivity; quasi-natural experimental design (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.mdpi.com/2071-1050/14/20/13375/pdf (application/pdf)
https://www.mdpi.com/2071-1050/14/20/13375/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:14:y:2022:i:20:p:13375-:d:944880

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().