◆ The final paper is to be a 4,000-word

(excluding bibliography) paper on a

selected topic of BRI.
◆ The PAPER submission deadline:
◆ Sunday, April 23, 2023
 Belt and Road Initiative and
the Reshaping of World Economy

2
What have you learned?
4
 Belt and Road Initiative and
the Reshaping of World Economy

Lecture 1. Trade and FDI

5
 1.4 Missing trade and FDI

• Belt and Road corridor economies have trade

and FDI relations below their potential.
– Corridor economies undertrade with each other and with
the rest of the world by 30 percent on average.
– As recipients of FDI, corridor economies fall short of their
absorptive potential by 70 percent

• This suggests that barriers to trade and FDI

– infrastructure
– policy gaps

6
 Belt and Road Initiative and
the Reshaping of World Economy

Lecture 2
Infrastructure and Policy Gaps

7
2.1 Transport infrastructure and
services

8
2.1 Transport infrastructure and
services

9
2.1 Transport infrastructure and
services

10
 2.3 Policies and institutions

Four sets of policies and institutions that can affect

the integration of corridor economies are related to

• trade facilitation
• tariffs and nontariff barriers
• restrictions on FDI
• trade agreements

11
 Belt and Road Initiative and
the Reshaping of World Economy

Lecture 3
Cost and Financing

12
3.1 Cost of the BRI

13
3.2 BRI financing

14
 Belt and Road Initiative and
the Reshaping of World Economy

Lecture 4
BRI Projects and
Trade Costs Reduction
15
4.2 Shipping time and trade cost

16
 Belt and Road Initiative and
the Reshaping of World Economy

Lecture 5
Impact on Trade and
Foreign Investment
17
5.1 Impact on trade: gravity theory

Indirect (long-term) effect of trade cost

Direct (short-term) effect of trade cost

18
5.1 Impact on trade

19
5.2 Impact on FDI

20
 Belt and Road Initiative and
the Reshaping of World Economy

Lecture 6
Impact on Income and Poverty

21
6.1 Trade effects on income

22
6.2 Trade effects on poverty

23
 Belt and Road Initiative and
the Reshaping of World Economy

Lecture 7
Complementary Trade Policy

24
7.1 Trade facilitation reform

25
7.1 Trade facilitation reform

26
 Belt and Road Initiative and
the Reshaping of World Economy

Lecture 8
Policies and Institutions

27
 8.1 Project development

Asian Infrastructure Investment Bank (AIIB)

• Multilateral Development Bank (MDB) established

by international treaty and headquartered in Beijing,
founded in 2016 to bring countries together to
address Asia’s infrastructure funding gap, estimated
at USD26 trillion through 2030.

• Mission: To improve economic and social

development in Asia, through a focus on sustainable
infrastructure, cross border connectivity and private
capital mobilization.

28
8.2 Institutional arrangements

29
 8.2 Institutional arrangements

Shaping the Belt and Road as a truly multilateral initiative

would require moving beyond the bilateral arrangements.

• For monitoring and enforcement, the current bilateral

relationships may be appropriate during the development
phases, but not during the operational phases

• Long-term institutional governance arrangements could serve

several roles, including institutionalizing coordination
mechanisms, providing a platform for public information and
transparency, and improving standards.

30
 Belt and Road Initiative and
the Reshaping of World Economy

Lecture 9
Private Sector Participation

31
9.1 Strengthening legal protection of
investments

32
 9.2 Supporting private sector
development
special economic zones along BRI economies

• as of October 2017, Chinese enterprises had developed 75

SEZs dubbed Overseas Economic and Trade Cooperation
Zones (OETCZs) in 24 Belt and Road corridor economies of the
99 Chinese overseas zones.

• The number of registered enterprises within the zones reached

3,412, or 78 percent of the enterprises in all Chinese overseas
zones.

• 56 OETCZs in the corridor economies in September 2016 had a

total investment of US$18.6 billion, output of US$50.7 billion,
created 177,000 jobs, and contributed US$1.1 billion in taxes
to the host countries.

33
 Belt and Road Initiative and
the Reshaping of World Economy

Lecture 10
Managing Fiscal Risks

34
 10.1 Fiscal risks

• BRI interest costs and maturities of Chinese loan

are on average more favorable than borrowing on
market terms.
– LIDCs: a median rate of 2 percent, a grace period of 6
years, and a maturity of 20 years
– EMEs: flexible interest rates, benchmarked to the 6-month
LIBOR rate, a median annual maturity of loans to between
12 and 18 years, and the grace period between 3 and 5
years

• World bank interest rate larger than 3 percent, e.g.,

Brazil 3.80, Indonesia 4.35, Myanmar 5.08

• London Interbank Offered Rate rate: 2.65 in 2019

35
 10.2 Policies and institutions to
manage the risks

• Countries in low scrutiny or low risk of debt distress,

if not substantially increasing their indebtedness as
a result of the BRI, would generally have the fiscal
space to increase investment.

• Countries with limited or no fiscal space would need

to
– limit the number of debt financed projects,
– rely on grant or highly concessional financing,
– favor foreign direct investment over debt financing,
– increase public savings to finance additional investments.

36
 Belt and Road Initiative and
the Reshaping of World Economy

Lecture 11
Managing Other Risks

37
11.2 Corruption

38
 Belt and Road Initiative and
the Reshaping of World Economy

39
What countries are you from?
41
 Belt and Road Initiative and
the Reshaping of World Economy

Case Studies

42
 3.1 Cost of the BRI

• Currently, Laos ranks

amongst the fastest
growing economies in the
world, averaging 8% a
year in GDP growth.

• China-Laos railway
– The 414-km from Chinese
province of Yunnan, to
Vientiane, capital of Laos.
– 2016-2021
– convert from a landlocked
country to a land-linked hub.

43
 3.1 Cost of the BRI

• Currently Timor-Leste’s
economy is mostly
dependent on the
extraction of oil reserves
from the Timor Sea which
account for a massive 80%
of GDP

• Beaço port
– Beaço is the area of the
country where the pipeline
from the Timor Sea will arrive
and where a factory will be
built to process natural gas.
44
 4.1 BRI transport projects

￥2911 45
 4.1 BRI transport projects

Khorgos to Aktau (Caspian Sea) 46

4.1 BRI transport projects

47
 4.1 BRI transport projects

Kra Canal

48
 4.3 the port of Piraeus

• The Greek port of Piraeus, top

port in Mediterranean Sea
• majority owned by China
COSCO Shipping Group since
2008
• In 2016, Piraeus annual
container throughput
increases by 168 percent in
2007–2016
• not among the top 15
container ports in Europe to
8th largest
• Greece’s Liner Shipping
Connectivity Index increased
from 27 in 2008 to 59 in 2018
49
 4.3 Khorgos–Almaty road

• Khorgos–Almaty road
• connects Khorgos, China with
Almaty, one of the major
economic centers of Central
Asia.
• The project upgraded the 305
kilometers of road from a
two-lane to a four-lane
highway.
• travel times had fallen by 40
percent, from five hours to
three.

50
 4.4 Network connected to BRI

• In November 2017, the

European Union, its member
states, and its six Eastern
neighbors in the Eastern
Partnership—Armenia,
Azerbaijan, Belarus, Georgia,
Moldova, and Ukraine—
endorsed the extension of
TEN-T to Eastern Europe.

• The plan identified priority

investments of around 12.8
billion euros up to 2030.

51
 4.4 Network connected to BRI

• The Greater Mekong Subregion is an initiative launched in

1992 by six countries in the Mekong River region. The GMS
program aims to enhance economic cooperation among its
members through cross-border infrastructure development

52
 5.3 Other Impacts

• Differences within each country

• The BRI has a positive impact to trading times not only on
bigger cities that are usually more connected to the network
but also on smaller cities that might be located in the
periphery of a country.

53
6.4 Spatially differentiated effects

54
6.4 Spatially differentiated effects

55
56
 8.1 Project development

Ex. Railway infrastructure and rolling stock enable vehicles and trains
to travel across borders without costly transloading.

57
 9.2 Supporting private sector
development

• Sino–Thai
Rayong
Industrial Park
(Thailand)

• close to the Thai

capital, Bangkok,
and the deep-
water port of
Laem Chabang

58
59
What have you known about
China?
Beijng-Shanghai High-
speed Railway

• Investment of 220
billion yuan
• Opened in 2011
• 15 hour to 5 hour
• Making profit since
2014
• 180 million passengers
in 2017
• 12.7 billion yuan net
operational profit in
2017 61
• Highway system in
Yangtze River Delta

• The region accounts for

20 percent of China's
Gross Domestic Product

• is responsible for one

third of China's imports
and exports.

62
• Rural Roads on
Poverty Alleviation
in China

• a road in Central
China.

• In the past five years,

China has seen 1.28
million km of rural
roads built or
• renovated, with 99.24
percent of townships
and 98.34 percent of
villages connected by
asphalt or cement
roads.

63
China's 18 free trade zones

64
 Private Sector Participation

In China, the private sector contributes

• 50 per cent of tax revenue,
• 60 per cent of gross domestic product,
• 70 per cent of industrial upgrades and innovation,
• 80 per cent of total employment,
• 90 per cent of the total number of enterprises.

65
China anti-corruption campaign

66
What homework have you done?
 1.1 BRI Trade

HW 1:
What are the main
exports of your
country? What are the
most valuable brands
of your country? (LESS
THAN ONE PAGE).

68
 HW 2:
What is the most expensive
office building of your
country? What is the
largest infrastructure
project of your country?
(LESS THAN ONE PAGE).
• Shanghai Tower $2.4 billion
• South-North Water
Transfer $62 billion

69
HW 3:
What are the top
export
destinations of
your country?
Closer or larger?
How about the top
import sources?
(LESS THAN ONE
PAGE).

70
 Infant industry protection:
Successful vs. Failure

HW 4:
What are (were) the infant industries protected
by the government of your country? Will (Did) it
succeed or not? (LESS THAN ONE PAGE).

71
 9.2 Supporting private sector
development
• Sino–Thai Rayong
Industrial Park
(Thailand)
• close to the Thai
capital, Bangkok, and
the deep-water port
of Laem Chabang
HW 5:
What is the largest
industrial park in your
country? How does it
support private or
foreign enterprises?
(LESS THAN ONE
PAGE). 72
What techniques have you
gained?
• Website

– https://data.worldbank.org/
Who will you become?
➢ President of Ethiopia, October 7, 2013 – October 25, 2018

➢ He was educated in China from 1976 to 1991, receiving his bachelor's

degree in philosophy of political economy and doctorate in international
law at Peking University.

➢ In the mid-1990s, he was Deputy Minister of Economic Development and

Cooperation, and he was appointed as Minister of Agriculture in 2001.

➢ He was also Speaker of the House of Federation from 2002 to 2005. He

served as Ethiopia's Ambassador to China, Japan, Turkey, and Azerbaijan.

➢ While serving as Ambassador to Turkey, he was elected as President of

Ethiopia by a unanimous parliamentary vote on 7 October 2013.
➢ President of the Democratic Republic of the Congo from January
2001 to January 2019.
➢ Joseph Kabila went on to get further training at the PLA National
Defense University, in Beijing, China in 1998.
➢ When he returned from China, Kabila was awarded the rank of
major-general, and appointed Deputy Chief of Staff of the Armed
Forces of the Democratic Republic of the Congo, in 1998.
➢ He took office ten days after the assassination of his father,
President Laurent-Désiré Kabila in 2001. He was elected as
President in 2006 and re-elected in 2011 for a second term.
➢ The first and current president of Eritrea, a position he has
held since after the Eritrean War of Independence in 1993. He
led the Eritrean People's Liberation Front (EPLF) to victory in
May 1991, ending the 30-year-old war for independence.
➢ Isaias began to study at the PLA Nanjing Army Command
College in China in 1965. After learning for half a year, Isaias
returned home for some reason. Although he only studied in
China for half a year, the influence on Isaias was very profound.
His later military and even political thoughts were basically
developed from here.
Good luck to
you
&
your people!