WHY PARTICIPATE IN THE “ONE BELT AND ONE ROAD†INITIATIVE? AN INCOME CONVERGENCE APPROACH

Guo Heng Hu (), Chi Keung Lau, Zhou Lu and Xin Sheng ()
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Guo Heng Hu: School of Business, Henan Normal University, P. R. China
Zhou Lu: ��School of Economics, Tianjin University of Commerce, P. R. China
Xin Sheng: ��Department of Accountancy, Finance and Economics, Huddersfield Business School, University of Huddersfield, Queensgate, HD1 3DH, UK

The Singapore Economic Review (SER), 2022, vol. 67, issue 04, 1209-1223

Abstract: This paper seeks to investigate the motivations of countries that participate in the One Belt and One Road (B&R) Initiative, a China-led economic development program with the intention of enhancing regional economic cooperation. We examine the income convergence hypothesis for B&R countries with both linear and nonlinear unit root tests to detect the presence of economic integration over the periods 1960–2016 and 1979–2016. For the B&R countries that are found to show income convergence to China in our income convergence testing, we argue that they tend to have a strong existing economic relationship with China. By contrast, the countries that have relatively weak economic relationships with China tend to show no convergence to China, and they take advantage of the B&R as an opportunity to catch up. Moreover, we find evidence that more countries converge to China’s real per capita income for the years after 1978 when China started its transition to a market economy and initiated the open-door policy to embrace globalization. The results suggest that China contributes to a higher degree of income convergence in regional integration.

Keywords: One Belt and One Road; China; economic integration; income convergence (search for similar items in EconPapers)
JEL-codes: C1 C5 R0 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1142/S0217590818500297

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