BELT AND ROAD INITIATIVE COUNTRIES: A FOCUS ON FOREIGN DIRECT INVESTMENT AND INFRASTRUCTURE

Abstract

Being source of external finance, the role of foreign direct investment (FDI) in bridging resource gap is pivotal, and helps host countries to reach and integrate into international markets. This research is conducted to assess the effect of infrastructure availability on FDI in Belt and Road Initiative (BRI) member countries. Panel data for 27 BRI member nations from Europe, Africa and Asia has been used for a period from 2000 to 2023. By applying random effect estimation model, the findings show that the main explanatory variable infrastructure has a positively significant impact on FDI. It is also evident that other explanatory variables such as market size, openness, human capital and economic stability also have significant influence on FDI. Exchange rate and consumer price index are used as proxies for economic stability and both significantly influence FDI; however, the influence of exchange rate is negatively significant.