Economic and Diplomatic Impacts of the Belt and Road Initiative on Western Nations in Infrastructure Investment Competition: Evidence from Japan

Shuhei Nishitateno and Yasuyuki Todo

Departmental Working Papers from The Australian National University, Arndt-Corden Department of Economics

Abstract: China's Belt and Road Initiative (BRI) has driven a global surge in large-scale infrastructure projects. While existing research has focused primarily on the BRI's effects on economic outcomes in participating countries, such as investment, trade, and debt dynamics, its economic and diplomatic implications for Western nations that do not participate in the BRI yet compete with China in global infrastructure development remain underexplored. This study addresses this gap by examining how the BRI has affected Japanese overseas infrastructure projects and Japan's diplomatic engagement with BRI countries. Using an event-study framework within a staggered difference-in-differences design and a panel of 123 low- and middle-income countries from 2007 to 2020, we find that the BRI significantly crowded out Japanese infrastructure projects and reduced visits to Japan by political leaders from BRI countries. These effects are especially pronounced among countries geographically proximate to Japan and China, where competitive pressures are most intense.

Keywords: China; Japan; Belt and Road Initiative; overseas infrastructure investment; diplomatic relations (search for similar items in EconPapers)
JEL-codes: F21 O19 P00 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2026-07
New Economics Papers: this item is included in nep-ppm
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Persistent link: https://EconPapers.repec.org/RePEc:pas:papers:2026-05

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