BRI and infrastructure development: Impact on the economic growth of lower-income African countries

Abstract

Belt and Road Initiative (BRI) is a multi-billion-dollar investment and a ‘Going Out’ strategy of China. The major vision of BRI is to accelerate infrastructure investment, which, in turn, improves connectivity, enhances trade and foreign direct investment and spurs economic growth in the participating countries. This research seeks to examine the influence of the BRI on key economic indicators—specifically gross domestic product (GDP) growth, unemployment and foreign direct investment across 20 low-income African countries. Employing a robust panel data least squares dummy variable modelling approach, the study analyses the country-specific impact of BRI for data spanning the period from 2008 to 2022. The research outcomes indicate varying impacts of the BRI across different nations. In most countries, the BRI has had no substantial influence on GDP per capita, yet a detrimental effect is evident in Mozambique. The results show BRI has a negative effect on foreign direct investment in Benin, Congo, Tanzania and Rwanda, whereas it has a positive impact in Mozambique and Sierra Leone. Whereas variables like gross capital formation, labour force participation and regulatory indices consistently display substantial positive effects on economic growth, investment and employment. The research underscores the necessity for strong domestic policies that can optimise economic advantages and guarantee long-term growth. JEL Codes: O11, O55, H54