Global Value Chain Optimization Effect of the Belt and Road Initiative – From the Perspective of Improving Participating Countries’ Position in the Division of Labor

Dai Xiang (戴翔)1 and Song Jie (宋婕)2*

1 School of Economics, Nanjing Audit University, Nanjing, China

2 School of Economics, Fudan University, Shanghai, China

Abstract: To promote the reconstruction and optimization of the global value chains (GVCs), it is essential to tackle the prominent contradictions and problems including inequality of opportunity and status in the evolution of the GVC division of labor. The Belt and Road Initiative (BRI) promoted by China has obtained remarkable achievements in this regard; however, there lacks sound theoretical and empirical evidence as to whether the BRI has driven the GVCs to develop towards a more equitable direction. This paper employs the difference-in-differences model to empirically analyze the GVC optimization effect of the BRI. In addition, on the basis of the so-called “five-pronged approach” index, the paper uses the mediating effect model to test the mechanism of influence. The empirical results suggest that the BRI has helped participating countries along the routes to increase their position in GVC division of labor significantly through the mediating mechanism of four out of the “ five-pronged approach”, namely policy coordination, road connectivity, unimpeded trade, and currency convertibility. The strengthening of and closer people-to-people ties has not yet appeared to be an effective mediator, and a possible explanation may be that its influence is indirect and lagging.

Keywords: Belt and Road Initiative, mutual benefit, global value chains, a community with a shared future for mankind

JEL Classification Code: F14, F20, L00

DOI: 10.19602/j.chinaeconomist.2022.09.05