One Belt and One Road Initiative

One Belt and One Road "is not an entity or a mechanism”. Rather, it is a concept and initiative of cooperative development that relies on the existing dual multilateral mechanism between Asia, Europe, non-mainland China, neighbouring oceans, and the existing platform for regional cooperation. It borrows the concept of the ancient" Silk Road", takes the initiative to develop economic cooperation and partnership with other countries and regions along the route to jointly build a community of mutual trust in politics, economic integration and cultural tolerance. Huang (2016) argues that such an initiative faces significant barriers due to lack of central coordination mechanism and clash of different political regimes. India and Japan are not enthusiastic about this project. In Europe, anti-globalisation sentiments typified by Brexit and influential far-right political leaders such as Marine Le Pen could also create roadblocks for China’s Belt and Road project. Nevertheless, Herrero and Xu (2017) argue that EU countries, especially landlocked countries, will benefit in trade in term of significant reduction in transaction costs. Du and Zhang (2017) have found that China’s overseas direct investment rose significantly in the belt-road regions and Central and Western Europe will benefit from large Chinese OFDI. However, most of the work concentrate on political issues and challenges that China faces and nothing much has been done on concrete impacts and the like.

Proposed Structure

This project will comprise three individual papers that will examine the consequences of OBOR initiative. The first paper will look at the how OFDI has impacted on the economic growth of the Belt-Road countries. The second paper will examine whether there is a possibility of single currency within the region. The last paper will employ the gravity model to investigate whether and how a reduction in transportation costs associated with the construction and improvement of transport infrastructure affects trade flows for Belt and Road countries.