Does the Belt and Road Initiative affect the energy intensity of countries along the route? An analysis of the direct and indirect effects

Abstract

We empirically evaluate the effect of China’s Belt and Road Initiative (BRI) on the energy intensity of countries along the route. Furthermore, we decompose this overall effect into direct effects via connectivity and indirect effects through development. We apply a relatively new synthetic control method based on interactive fixed effects to identify the causal effects of the BRI. Our main results include: (1) the overall effect of the BRI reduces the energy intensity of countries along the route by 0.0152 toes per thousand dollars, of which the direct effect is 0.0125 (82%); (2) the indirect effect in the current status is limited, mainly through the contradictory effects of economic growth and industrial structural change; and (3) countries along the route with a lower level of development, higher levels of energy technology, more abundant energy endowments, and less stringent carbon regulations experience a greater reduction in energy intensity after the BRI.

Keywords:

• Belt and Road Initiative
• energy intensity
• direct and indirect effects
• synthetic control method

JEL Code:

• Q40
• Q43
• Q51
• C21
• C54

Authors’ contributions

Banban Wang: Conceptualization, methodology; writing – original draft, review and editing; funding acquisition. Yuxuan Liu: methodology; formal analysis; data curation; software; visualization; writing – original draft.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Supplemental data

Supplemental data for this article can be accessed online at https://doi.org/10.1080/09640568.2023.2175648.

Notes

1 For example, in 2017, their per capita GDP was only 68% of the world’s average; in contrast, their growth rates in GDP, carbon emissions, and energy consumption were all higher than the global average (3.82%, 2.86%, and 1.73% compared with 3.30%, 1.83%, and 1.44%) according to the World Bank Statistics.

2 Such as Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road, Guidance on Promoting Green Belt and Road, and The Belt and Road Ecological and Environmental Co-operation Plan.

3 China accounted for more than one-third of the global accumulated installed wind power capacity in 2018 according to the statistics of the Global Wind Energy Council (Leng et al. 2020).

4 Data are from: https://www.financialnews.com.cn/zt/ydyl2019/201904/t20190427_158980.html.

5 Data source: http://www.gov.cn/xinwen/2022-10/09/content_5716806.htm.

6 Easily obtained if you substitute Equation (6)(6) $$\tilde{{\mathit{Z}}_{\mathit{\text{it}}}}={\mathit{Z}}_{\mathit{\text{it}}}-\widehat{{\mathrm{\delta }}_1}{\mathit{\text{BRI}}}_{\mathit{\text{it}}}.$$(6) into (7) and compare it with Equation (4)(4) $${\mathit{y}}_{\mathit{\text{it}}}={\mathrm{\alpha }}_1{\mathit{\text{BRI}}}_{\mathit{\text{it}}}+\mathrm{\sigma }{\mathit{Z}}_{\mathit{\text{it}}}+{\mathit{x}}_{\mathit{\text{it}}}\mathrm{\beta }+{\mathit{f}}_{\mathit{t}}^{\prime }{\mathit{\lambda }}_{\mathit{i}}+{\mathrm{\mu }}_{\mathit{i}}+{\mathrm{\eta }}_{\mathit{t}}+{\mathrm{\epsilon }}_{\mathit{\text{it}}}.$$(4) .

7 The list of countries along the Belt and Road route is referred to in the definition of Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road and the Statistical Bulletin of China’s Foreign Direct Investment.

8 See its balance test result in the Appendix Table B (online supplemental material).

9 The “Travel and Tourism Competitiveness” by the World Economic Forum collected business executives’ ratings on the strictness of the country’s environment.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China (Project No. 72273047) and the MOE (Ministry of Education in China) Project of Humanities and Social Sciences (Project No. 20YJC790130).