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TRANSCRIPT
Kaku Attah Damoah1,2
Giorgia Giovannetti1,3
Enrico Marvasi1,4
1 UNIVERSITÀ DI FIRENZE2 UNICEF FIRENZE
3 EUROPEAN UNIVERSITY INSTITUTE4 POLITECNICO DI MILANO
A Global Value Chain
Rationale for the Allocation of
Belt and Road Projects
The Belt and Road Initiative
• Officially announced by Xi Jinping in 2013
• Is a China-led initiative to easing bottlenecks to Eurasian trade
• Infrastructure development is the most explicit and visible aspect of the project
• Potential to enhance policy coordination, trade facilitation, financial integration as well as capital and labour mobility
2
A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
A large scale project
• More than sixty countries
• Gross Domestic Product is $23 trillion(30% of world GDP)
• Population approximately 4.4 billion people(around 60% of the world population)
• Six land corridors
3
A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
B&R land corridors
4
A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
Main questions regarding the BRI
Two main aspects have been considered yet by researchers:
1. impacts and the effects of the BRI on
• trade costs
• trade and GVC participation (via lower trade costs)
• GDP, growth and development
2. reasons behind the BRI and the official rhetoric in favor of the initiative
• strategic and geo-political reasons
• economic reasons (mostly macroeconomic)
5
A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
Implications and impacts
• Trade costs→ are going to decrease much as BRI countries lack infrastructure (e.g. low logistics performance index)
• shipment times will decrease by 1.2-2.5% [de Soryres et al. (2018) ]
• expected fast growth of container traffic [Vinokurov et al. (2018)]
• Trade flows→ trade volume increases gravity and comparative advantage model [Baniya, Rocha, & Ruta (2019)], mostly due to
• improvements in hard (i.e. physical) and soft (i.e. administrative and ICT) connectivity [Garcia-Herrero & Xu (2017) and Ramasamy et al. (2017)]
• GVC and trade in intermediates (TiVA, 28 BRI countries only) [Boffa (2018)]
• GDP and growth→ poorer countries gain more, China major beneficiary [Enderwick (2018), Villafuerte et al. (2016)]
• Risk of exposure to China’s demand and competition shocks [Boffa (2018)]
• Network position matters, prioritizing weak links reinforces the network [Derudder et al. (2018)] 6
A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
Non-economic reasons are relatively vague
• Promoters often stress the mutual benefits and the creation of win-win situations, not everyone shares such positive attitude towards the initiative
• Strategic and geo-political interests go beyond economics [Cheng (2016)]
• Some distrust among recipient countries
o e.g. for India Nataraj and Sekhani (2015) and Banerjee (2016) argue that, despite some distrust,
• B&R projects are likely to bring about gains from trade and from infrastructure building,
• while an ineffective involvement may lead to isolation risks 7
A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
China’s economic reasons are stated very explicitly
• sustain China’s economic growth and transition towards a more balanced development pattern [Huang (2016)]
• “comparative advantages in manufacturing, such as low labor costs, have begun to disappear. For this reason, the Chinese leadership wants to capture the higher end of the global value chain. To do this, China will need to upgrade its industry.” (pp.8) [Cai (2017)]
• “we should gradually migrate our low-end manufacturing to other countries and take pressure off industries that suffer from an excess capacity problem. At the same time, we should support competitive industries such as construction engineering, high-speed rail, electricity generation, machinery building and telecommunications moving abroad.” Hu Huaibang, Chairman of the China Development Bank, 2016
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A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
Are BRI investments following a GVC rationale?
• Economic motivations explicitly include GVC among the reasons
1. Investments may follow specialization and GVC trade
• exploiting within-sector division of labor by moving L-intensive phases abroad (smaller investments, higher returns)
• prioritizing central hubs can bring about scale economies
2. Investments may not follow specialization and GVC trade
• reinforcing weak GVC links in less central countries may increasediversification and stabilize the network
• because they simply search connection to new (large) markets
• because they respond to other factors (geography, political considerations)
9
A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
Our research questions
• Do BRI investments favor countries that trade intermediates or trade them more with China?
• Do sectoral specialization and the position in the trade network play a role in projects allocation?
✓ Yes → BRI is building up on existing GVC, reinforcing them and may increase division of labor and centralization of the network, facilitating shock transmission
No → BRI is likely to change the GVC patterns, decentralize the network increasing interconnectedness but also stability
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A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
Preview of results
1. More investment projects in large and relatively poor countries, while richer countries get fewer but greater investments
2. Project recipients display relatively more diversified export structures and their specialization tends to overlap more with that of China
3. Investments tend to favor central countries that are more involved in GVC as suppliers of intermediates to China
4. Also in intra-industry trade and export sophistication export are positively associated with (larger) investments
5. Geography and political proximity also matter, but do not explain all
11
A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
Data on B&R projects
• Reconnecting Asia project of the Center for Strategic and International Studies (CSIS)
• List of countries involved in the BRI, some of which have already received and completed infrastructure projects
• Our dataset includes roads, rails, seaports, and dryportsinfrastructure projects completed between 2013 and 2018
• A total of 329 completed infrastructure projects in B&R countries. Roads account for 65% of all completed projects
12
A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
Trade and specialization
13
A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
Cum. positive
Lafay RCA
OBOR 19.713
of which
projects 18.525
non-projects 23.128
non-OBOR 19.588
Total 19.630
Aggregate
RCA overlap
(Balassa)
Aggregate
RCA overlap
(Lafay)
OBOR 0.400 0.467
of which
projects 0.409 0.496
non-projects 0.374 0.383
non-OBOR 0.299 0.448
Total 0.333 0.454
• B&R countries RCA overlaps with China
• Even more so for projects recipients
• Projects recipients have a more diversified export structure
Trade in intermediate goods
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A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
Interm. exp
/Total exp.
Interm. imp.
/Total imp
Int. exp. to CHN
/Interm. imp.
Int. imp. from CHN
/Interm. imp.
OBOR 70.1% 63.5% 4.2% 5.0%
of which
projects 71.2% 64.4% 4.6% 4.9%
non-projects 66.9% 61.0% 3.1% 5.5%
non-OBOR 71.4% 64.2% 3.6% 4.8%
Total 70.9% 63.9% 3.8% 4.9%
• Projects recipients slightly more involved in intermediate trade
• They tend to supply intermediates to China
World intermediate trade network + B&R countries
(manufacturing, 2012)
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A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
China’s intermediate exports
(manufacturing, 2012)
16
A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
China’s intermediate imports
(manufacturing, 2012)
17
A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
B&R countries (only) intermediate trade network
(manufacturing, 2012)
18
A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
Allocation of B&R projects
𝑦𝑖 = 𝛼 + 𝛽1𝑅𝐶𝐴𝑖𝑗 + 𝛽2 𝐶𝐸𝑁𝑖+𝛽3𝐸𝑥𝑝𝑖𝑗 + 𝛽4𝐼𝑚𝑝𝑖𝑗
+𝛽5𝐸𝑥𝑝𝑖𝑗𝐶𝐻𝑁 + 𝛽6𝐼𝑚𝑝𝑖𝑗
𝐶𝐻𝑁
+𝜷7′𝒁𝑖 + 𝜀𝑖
• 𝑦𝑖 is n. proj. / value of proj. (ln) completed between 2013-2018
• 𝑅𝐶𝐴𝑖𝑗 sector-level rca overlap with China
• 𝐶𝐸𝑁𝑖 is country centrality in the B&R intermediate trade network
• 𝐸𝑥𝑝𝑖𝑗 and 𝐼𝑚𝑝𝑖𝑗 are interm. shares over total exp/imp
• 𝐸𝑥𝑝𝑖𝑗𝐶𝐻𝑁 and 𝐼𝑚𝑝𝑖𝑗
𝐶𝐻𝑁 are China’s sh. on int. exp/imp
• 𝒁𝑖 country-level controls
• All regressors are lagged at 2012 19
A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
Income and population
• B&R countries are relatively poor, but also very heterogeneous
• The income gap between countries that received (and completed) projects and the other B&R countries is even larger
• Investments seem to go where the infrastructure is more lacking and perhaps the return on each dollar spent is likely to be higher
• Projects tend to go towards large countries
20
A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
GDPpc (2012)
(US $)
Pop. (2012)
(mln)
OBOR 10627 50.2
of which
projects 7700 62.5
non-projects 19603 12.4
non-OBOR 16927 35.3
Total 14693 40.6
Number and value of completed projects
vs. GDP per capita
21
A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
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SAUSAU
TUR
MNE QAT
PAKPAK
JOR
SVK
IRQ
TUR
GEOGEOHUNBIH
ROUGEO
SGP
UKR
ROU
ALBBHR
AZE
NPL
BIHGEO
YEM
VNM
EGY
POL
BGD
ARM
KHM
ARE
MMR MNG
VNM
LAO
MNE
ROU
BHRLBN
TUR
GEO
MNE
POL
LVA
KWT
CZE
KWTYEM
HRV
ISRLTU
MMR
KGZ
KAZ
LAO
MYS
LTU
LKA
YEM
BGD
BTNALB
AFG
RUS
HUN
CZE
ROU
YEM BHR
MDV
POL
MYSIRQCZE
AFG
IRQ
KAZ
IRQIRQ
PHL
MKD
IRQ
THA
JOR
UZB
BGD
LKA
IRNPOL
KWT
IRN
LVA
KWT
LVA
PAK
IRNIRN
BRNALB
JOR
HUN
KHM
LVA
ALB
HRV
IRN
ROU
PHL
MYS
KGZ
TJK
OMNBHR KWTUKR
THA
BGD
IRN
NPL
MMR
IDN
KGZ
ISR
POL
IND
LVA
IRN
MNG
INDIND
BLR
IND
CZE
IND
ALBMYS
AFGAZE
ARM
AREKWT
PAK
LTUALBMDA
AFG
PAK
ARENPL LBN ARE
BLRBGR
BRN
HUN
BLR
HUNIRN
HUN
KHM
HUN
MNG
KHM
BLR
HUN
OMN
SVN
HRV
MDV
PHL
MDV
VNM
LKA
MNG
IND
AZE
BGD
MNE
LAO
LBN
GEO
IDN
LTU AREYEM
LAO
UKR
05
10
15
20
25
6 7 8 9 10 11 12Log GDP per capita 2012
95% CI predicted nprojects
Total Number of Completed Projects between 2012 and 2018
poorer countries get more projects richer countries get larger investment
MMR
IRN
UZB
BTN
IRQ
AFG
ARM
ALB
MYSSGP
MDAAFG
UKR
TKM
KHM
BTN MNG
IDN
UKR
BTN
KAZ SVNSVN
LVA
MYS
BTN
MDATJKAFG
BTN
KGZ
BLR
KAZ
LAO
KAZ
CZE
KHMSRB
MYS
KGZ
HUN
SAU
AFG
LAO
POL
PHL
MYS
BIHLKA
RUS
MDVPAKTJK
SVNKAZSVK
TJK
SVN
MDVPHL
MYS
PAKPHL
MYS
THA
HRV
TUR
GEOAFG
AZEKAZ
GEO
BIH
MYS
PHL
BGR
HUNVNM
UKR
AFG
VNM
MYS
AZETHA
IRQ
MMR
IND
LVA
THA
SGP
LAO
ALB
MNGMMR
SAU
ROU
BTN
BIH
PHL
RUS
SVN
VNMVNM
SAU
SVN
HUN
EST
VNM
RUS
VNM
MDV
SRB
VNMVNMLAOBIH
CZE
SGPIDN
TKM
SVN
HRV
IND
ROU
SVNIRQ
AFG
BIH
BGD
ALB
SGP
MMR
LKASVK
TURMYS
POL
ALBMDA
ALB
IRN
ALB
SVK
HRV
SVK
PHL
TKM
IRQ
SAU
POLSRB
BLR
CZE
LKA
UZBLAO
IDN
UZB
KAZ
MYSTUR
SVK
MYS
UZB
KHM
IRQ
TUR
BTN
LAOUZB
MDV
IND
MYSRUS
LKA AZE
ROU
MMRALB
BTN
KAZLKA
IRQ
UKR
LKA
IDN
LKALKALKA
IRQ
LKALKA
TUR
BGR
MMR EST
BGRSVK
BTN
BGD
HUNVNM
UKR
TKM
BGR
CZE
BIH
AFGPAK
MNG
AFG
ESTEST
ROU
TUR
UKR
POL
UKR
MDA
IND
UKRUKRUZB
TKM
IDN
LAO
IRN
LVA
SGPSGP
SRB
LVA
PHLKHM
PHL
THASVK
RUS
GEO
BIH
MDA
IND
TJK
IND SVN
IDN
SRB
MYS
BGD
IND BGR
AFG
BLRBLR
IDN
MMR
AFG
BLR
SVNIND
BLR
AFG
BGRSVK
ESTALB
BLR
SVK
HRV
UZB
BLR
ARM
TUR
LVALVATJK
ARM POL
BIH
TKM TUR
MNG
IRNPOL
THA
RUS
HRV
UKR
SAU
IDN
MDA
POL
UKR
ARM
UKR
POL
EST
AFG
CZE
KGZ
UKR
HRV
TUR
KGZ
MMR EST
SRB
SGP
HUN
HRV
BLR
MNG
PHL
SVKLKA
UZB
THA
PHL
SGP
KHM
THA
LVA
BIH
PAK
LKA
IRQ
MMR
IDN
BGD POLSVN
KHM
TKM
SGP
TUR
AZE
TKM
BLR
SGP
KGZ
TKM
BGDBGD
TKM
SRB
TJK
AZE
TJKTJK
RUSTKM
TJKTJK
SVK
TJK GEO
POL
KGZ
SVN
MMR
IDN
SVK
PAK
MMR
TUR
BGR SVN
TUR
MMR
VNM
THATHABIH
UZB
TKM TURRUS
TJK GEO
LKATHA
UZB
THA
TUR
THA
TUR
SAU
THA
IDN
TUR
ROU
SGP
VNM
THA
ROU
MNG
THA
AFG
BGDROU
AZETHA SVNLKA
LAOAZEAZE
KAZBGR
MMRLVA
IND
HRVHRV
CZE
AZEAZEBIH
HRV
MNG
HRVPHL
LKA
ALB
KAZ
VNM
MDV
SRB
AZE
GEO
SRB
TUR
UZB
SRB
SVK
BGD
IND
TJK
IRQ
VNMAZE
SAU
BGD
PHL
BLR
SAU
HUN
BIH
SGP
ALB
SAU
BGD
SAUSAUSAU
BGR
HRVPOL
KHM
BGRIND
MDA
IRQ POLHRV
EST
ARM
MDV
LKA
TKM
THAIRQ
CZE
ESTEST
IDN
CZE
RUS
AFGPAK
SVN
KHM
IRQ
KGZ
BTN SAU
BGD
AFG
CZE
GEO
UZB
CZE
KAZ
CZE
AFG GEO
IDN
BIH
IRN
TJK
KAZSVK
RUS
VNM
MDA
RUSRUS
ARM KAZ
RUSRUS
SVK
RUSRUS
BGRIND
VNM
MMR
PAK
KAZ
KHMKHM
KAZ SVNSRB POL
ROU
CZE
BTN
ROU
BTN
KHMKHMBGD
RUSRUS
MDV
UKR
BLR
SGP
ALB
ARM
SAU
IDN
EST
AFG
BLR
KHM MDA
UZB
SRBBGDMDV
PHLHRV
MYS
KAZPOLPOL
PHL
SGP
MMRLVA
SRB
LVA
UKR
PHL
MMRSAU
PHL
THA
PAK
ALB
IRN
BIHBGR
MDV
BLR
BTN
IND
SGPIDN
KHMBGD
AFG
SRB
BGR
LVA
BIH
SRB
UKRUZB
PAK HRV
SVK
TJK
IRQ
PHLALB
BGR
KGZ
SVKKAZ
CZE
HUN
BGR
UZB
TKM
LAO
MDV
BIH
KHM
BTN
PHL
ARM
LAO
MNG
AZE
PAK
BLR
SGP
MNG
PAK
SVN
PAKPAKPAK
MNG
TKM
THA
EST
IRNROU
SRB
ESTALB
UZB
IDN
AZE
TJK
BTN
ARM
MNG
SVNSRB
PAK
AZE
BGDARMARM
HRV
SVKSVK
HRV
AZE
SAUMNG
UKR
IND
IRN
EST
UZBLAO
MYSTUR
BIH
TJK
BGD
SVN
ROU
SVK
MDV
IND
SAU
KHM
SGP
TUR
TJKPAK IRN
ALB
TKM
HUN
BGD
UZB
BTN
TKM
ARMIRNPAK
GEOKGZ
CZE
THABIH
TKM
KAZBIH
UZB
KGZ
AZE
IRN
MNG
GEO
SAU
TKM
UKR
BGRIND
HRV
ARM
HRV
HUN
ARM
MNG
BIHBGR
RUS
POLHRV
EST
BLR
SVK
MDA
TKM
MDAPHLKGZ
GEO
BIH
MMR
HRV
LAO
TKM
ROU
MMR
MDA
SGP
CZE
GEO
IDN
ROU
UKR
MDAPHLMDV
IND
MDA
SVK
PAK
SGP
SVNSRB
BTN
BIH
IRQ
EST
CZE
MDV
UZB
ARM
UKR
CZE
AZE
GEO
SGP
HUN
IRN
AZE
LVA
SVN
TJK
MNG
MDV
SAU
MDV
MNG
THA
ROU
POLKAZ
UZB
IND
TKM
BGRARM
BLR
SAU
MDAMDA
BLR
PHL
BTN
MDA
RUS
MDAKHM
ARMLKA
VNM
ALB
IRQIRN
MMR
POL
ROUTJK
TKM
LAO
THA
TUR
KHM MDA GEO
HUN
EST
HUN
BTN
PAK
MYS
MNG
IRQ
MNG
IDN
VNM
KAZ
HUNVNM
LVA
MYS
SAU
KGZ
SGP
RUS
SRB
MYS
MDV
LAO
KGZ
BGR
SGP
AZEBGR
ARM
TKM
ALB
ARM
HRV
HUN
CZE
THA
UZB
AFG
LVATJK
LKA
UZB
MDV
CZE
SRB
MDV
LVA
SVN
MDVMDV HRV
MYS
SVKBIH
IRNMDA
TURMYS
ARMIRN
AZEIND BGR
MDA
BGD
IDN
ARM
BLR
ALBMMR
TJK
ARM
AFG
MYS
IRQ
LVA
SGP
GEOGEO
UKR
BTN
LVA
IDN
MMR
TUR
VNM
CZE
MDV
IRQ
EST
ARMBGD
GEO
ESTBTN
ESTEST
SVN
ROU
EST
MDA
HUN
PHLTJK
LKA
IRQ
KHM
IDN
UZBHUN
IRN
MNG
PAK
KAZ
MDV
IDNIDN
BTN
MDV
RUS
VNMHUN
BGRIND SVN
GEOMDA
THASVK
BGR
ROU
SAU
AFG
EST
SVK
GEO
BGR
UKR
SRB
SAU
LAO
LKA
ESTMMR
MYS
SRB
SGP
KHMBGD
BLR
PHL
MNG
PAK
BLR
ROU
HUN
SRB
AZEBIHKAZ
GEO
UZB
ARM POL
LVA
BTN
LVAEST
IRN
LVA
MNG
KHM
LAO
ROU
POL
TUR
IRQ
LAOLAO
ROU
AZELAOLAO
MDA
LAO
KGZ ALBKGZ
LAO
KGZKGZKGZKGZKGZMDA
KGZ
BLR
SRB
LKA
RUS
BGR
SRB
IDN
SVN
BTN
BGD
LVA
RUS
KAZ
CZE
POL
VNMLKA
CZE
TJK
MNG
SGP
VNMVNM
TJKKHM ROU
KAZ
TKM
SAU
KGZEST
ALB
UKR
KAZ
TKM
KGZ
SRBIRN
BTNMMR
RUS
SAUSAU
TUR
PAKPAK
SVK
IRQ
TUR
GEOGEO
HUN
BIH
ROUGEO
SGP
UKR
ROU
ALB
AZEBIH
GEO
VNM
POLBGDARM
KHM
MMRMNG
VNMLAO
ROU
TUR
GEO
POL
LVA
CZE
HRV
MMR
KGZ
KAZ
LAO
MYS
LKA
BGD
BTN
ALBAFG
RUS
HUN
CZE
ROUMDV
POL
MYS
IRQ
CZE
AFG
IRQKAZ
IRQIRQ
PHL
IRQTHA
UZB
BGD
LKA
IRNPOL
IRN
LVALVA
PAK IRNIRN
ALB
HUN
KHM
LVAALB
HRVIRNROU
PHL
MYS
KGZTJK
UKR
THABGD IRN
MMR
IDN
KGZ
POLIND
LVA
IRN
MNG
INDIND
BLR
IND
CZE
IND
ALB
MYS
AFG
AZE
ARM
PAK
ALBMDAAFG
PAK
BLR
BGR
HUN
BLR
HUN
IRN
HUN
KHM
HUN
MNG
KHM
BLR
HUN
SVN
HRVMDVPHL
MDV
VNMLKA
MNG
INDAZE
BGD
LAO
GEO
IDN
LAOUKR
16
18
20
22
24
6 7 8 9 10 11 12Log GDP per capita 2012
95% CI predicted ln_mvproject
Log average value of projects
Number of projects (poisson model)
22
A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
(1) (2) (3) (4) (5) (6)
VARIABLES Dependent Variable: Number of Completed Projects
RCA overlap 0.489*** 0.301*** 0.564*** 0.407*** 0.119* 0.441***
(0.0659) (0.0677) (0.0671) (0.0662) (0.0684) (0.0679)
Betweenness 0.315*** 0.240*** 0.293*** 0.263*** 0.204*** 0.233***
(0.0109) (0.0106) (0.0107) (0.0112) (0.0111) (0.0111)
Intermediate Export -0.311*** -0.156* -0.154* -0.581*** -0.530*** -0.544***
(0.0806) (0.0850) (0.0811) (0.0822) (0.0872) (0.0829)
Intermediate Import 0.476*** 0.220*** 0.335*** 0.193*** -0.0988* 0.0314
(0.0612) (0.0602) (0.0618) (0.0599) (0.0589) (0.0600)
Intermediate Export CHN 0.411*** 0.795*** 0.528*** 0.169 0.247** 0.192
(0.111) (0.109) (0.109) (0.118) (0.120) (0.118)
Intermediate Import CHN 0.412** 0.747*** 1.160*** 1.449*** 1.157*** 1.756***
(0.177) (0.181) (0.169) (0.180) (0.188) (0.175)
GDP per capita (ln) -0.408*** -0.335***
(0.0101) (0.0122)
Logistics index -0.121*** -0.0757**
(0.0293) (0.0299)
Export soph. (ln) -1.254*** -0.903***
(0.0624) (0.0635)
Constant 4.574*** 1.642*** 12.94*** 4.563*** 2.526*** 10.43***
(0.125) (0.129) (0.588) (0.135) (0.136) (0.597)
Observations 1,586 1,508 1,612 1,586 1,508 1,612
Sector FE Yes Yes Yes Yes Yes Yes
Region FE No No No Yes Yes Yes
Pseudo R2 0.172 0.0461 0.0745 0.285 0.236 0.255
Robust standard errors in parentheses; *** p<0.01, ** p<0.05, * p<0.1
Value of projects (OLS)
23
A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
(1) (2) (3) (4) (5) (6)
VARIABLES Dependent Variable: Projects value (ln)
RCA overlap 1.279*** 0.728*** 0.989*** 0.979*** 0.621** 0.811***
(0.246) (0.254) (0.252) (0.236) (0.241) (0.243)
Betweenness 0.675*** 0.663*** 0.634*** 0.686*** 0.690*** 0.660***
(0.0308) (0.0205) (0.0275) (0.0335) (0.0238) (0.0309)
Intermediate Export -1.045*** -0.231 -0.909** -0.964*** -0.313 -0.884**
(0.381) (0.385) (0.379) (0.370) (0.374) (0.370)
Intermediate Import 1.037*** 0.791*** 0.817*** 0.809*** 0.705*** 0.713***
(0.241) (0.233) (0.234) (0.235) (0.230) (0.231)
Intermediate Export CHN -0.269 0.0985 -0.146 -1.067* -0.654 -0.968*
(0.522) (0.473) (0.512) (0.553) (0.510) (0.541)
Intermediate Import CHN 1.221 1.220 1.525** 1.650** 1.326* 1.691**
(0.780) (0.745) (0.776) (0.824) (0.795) (0.807)
GDP per capita (ln) -0.00200 0.0368
(0.0389) (0.0373)
Logistics index 1.088*** 0.878***
(0.0846) (0.0937)
Export soph. (ln) 0.950*** 0.735***
(0.175) (0.210)
Constant 20.03*** 16.83*** 11.22*** 20.53*** 18.09*** 13.96***
(0.506) (0.459) (1.678) (0.506) (0.494) (2.015)
Observations 1,196 1,144 1,196 1,196 1,144 1,196
Sector FE Yes Yes Yes Yes Yes Yes
Region FE No No No Yes Yes Yes
R2 0.161 0.236 0.173 0.226 0.280 0.231
Standard errors in parentheses; *** p<0.01, ** p<0.05, * p<0.1
Geography and political proximity (PPML)
24
A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019
(1) (2) (3) (4) (5) (6)
VARIABLES Dep. Var.: Projects number Dep. Var.: Projects value (ln)
RCA overlap 0.435*** 0.122 0.430*** 0.0651*** 0.0432*** 0.0457***
(0.127) (0.124) (0.131) (0.0105) (0.0104) (0.0102)
Betweenness 0.217*** 0.0948*** 0.140*** 0.0239*** 0.0198*** 0.0157***
(0.0270) (0.0195) (0.0256) (0.00220) (0.00153) (0.00185)
Intermediate Export -0.479*** -0.244* -0.394*** -0.0342*** 0.00166 -0.0216*
(0.143) (0.147) (0.149) (0.0127) (0.0130) (0.0121)
Intermediate Import 0.189* -0.177* -0.00608 0.0302*** 0.0214** 0.0136
(0.102) (0.0951) (0.103) (0.00921) (0.00873) (0.00863)
Intermediate Export CHN 0.0333 -0.172 -0.103 -0.0366** -0.0330** -0.0392**
(0.255) (0.306) (0.303) (0.0175) (0.0157) (0.0164)
Intermediate Import CHN 1.433*** 1.144*** 1.643*** 0.182*** 0.155*** 0.199***
(0.345) (0.382) (0.392) (0.0304) (0.0286) (0.0293)
GDP per capita (ln) -0.252*** 0.00507**
(0.0380) (0.00208)
Logistics index 0.440*** 0.0661***
(0.0859) (0.00568)
Export soph. (ln) -0.176 0.124***
(0.191) (0.0118)
Common border 0.0301 0.393*** 0.226*** 0.000159 0.0220*** 0.0193***
(0.0714) (0.0747) (0.0763) (0.00510) (0.00518) (0.00525)
Distance -0.0564 -0.138 -0.134 0.0977*** 0.0899*** 0.104***
(0.0953) (0.105) (0.102) (0.00801) (0.00910) (0.00760)
Voting agreement CHN 0.0149*** 0.0275*** 0.0193*** 0.00399*** 0.00437*** 0.00467***
(0.00218) (0.00201) (0.00225) (0.000187) (0.000189) (0.000184)
Constant 3.064*** -0.351 2.961 1.860*** 1.728*** 0.626***
(0.830) (0.969) (2.170) (0.0730) (0.0761) (0.134)
Observations 1,482 1,404 1,508 1,144 1,092 1,144
Sector FE Yes Yes Yes Yes Yes Yes
Region FE Yes Yes Yes Yes Yes Yes
R2 0.421 0.448 0.388 0.460 0.524 0.505
Standard errors in parentheses; *** p<0.01, ** p<0.05, * p<0.1
Conclusion
• B&R investment allocation is compatible with a GVC rationale
• Opportunity for China to engage other developing countries in GVC trade and benefit from importing intermediate inputs and moving up in the value chain
• Developing countries are likely to be strongly affected by Chinese investments as the returns even to relatively small projects are likely to be large. In a network perspective strengthening the weak links is likely to make the entire network more stable
• B&R countries display a specialization that is relatively similar to that of China. Can this reinforce China’s comparative advantages and help upgrade its productions by building on the specialization of other countries in the same sectors but on different phases?
25
A GVC Rationale for the Allocation of B&R Projects
Attah Damoah, Giovannetti, Marvasi
LUISS, Roma 21/10/2019