Foreign direct investment along the Belt and Road: A political economy perspective

Jiatao Li, Ari Van Assche, Lee Li, Gongming Qian

Research output: Journal PublicationArticlepeer-review

7 Citations (Scopus)

Abstract

In 2013, China launched its ambitious Belt and Road Initiative (BRI), a large portfolio of infrastructure projects across 71 countries intended to link Eurasian markets by rail and sea. The state-led nature of the Initiative combined with its transformative geopolitical implications have conditioned the type of engagement that many governments and firms in host and third countries are willing to take in Chinese-funded BRI projects. Building on two theoretical streams that have originated in international political economy but have received growing attention in international business, varieties of capitalism and geopolitics, this perspective shows how a greater understanding of the institutional and geopolitical context surrounding BRI helps decipher the selection of host-country firms and third-country MNEs in Chinese-funded BRI projects. We portray firm selection in a BRI project as the outcome of a one-tier bargaining game between China and a host country. We show how institutions and geopolitics influence both the legitimacy gap of Chinese SOEs in a host country and the host country’s relative bargaining power, affecting the likelihood that host firms and third-country MNEs are selected in BRI projects. We also discuss the geopolitical jockeying strategies that these firms can adopt to influence the outcome of the bargaining game.

Original languageEnglish
Pages (from-to)902-919
Number of pages18
JournalJournal of International Business Studies
Volume53
Issue number5
Early online date1 Jun 2021
DOIs
Publication statusPublished Online - 1 Jun 2021
Externally publishedYes

Keywords

  • Belt and Road Initiative
  • China
  • FDI
  • bargaining
  • geopolitics
  • institutions
  • jockeying strategies

ASJC Scopus subject areas

  • Business and International Management
  • Business, Management and Accounting (all)
  • Economics and Econometrics
  • Strategy and Management
  • Management of Technology and Innovation

Fingerprint

Dive into the research topics of 'Foreign direct investment along the Belt and Road: A political economy perspective'. Together they form a unique fingerprint.

Cite this