Belt and Road Initiative (BRI) is an important effort that is meant to improve regional cooperation. Also, it aims to improve connectivity on a continental scale. Although the initiative is still taking shape, BRI or 一帶一路 consists of Silk Road Economic Belt that links China to South and Central Asia and even to Europe, and the new Maritime Silk Road that links China to Gulf Countries and Africa. Other economic corridors have been identified to link other countries to the project. These are the opportunities and risks associated with this massive initiative.
Tremendous Size and Scope
At the moment, BBR economies account for about a third of the global trade and GDP and nearly two-thirds of the world population. For most countries, the poverty ratio or the percentage of people living below the poverty line is quite high. For instance, 25% in Kenya, 23% in Djibouti and Uzbekistan, and 21% in Laos. If the project is successful, it is likely to benefit a lot of poor people and even swath the world’s economies with the positive spillover on the effects of global welfare.
Large Unexploited Potential
You should note that BRI economies are integrated with the rest of the world and with each other. These countries contribute to global exports that have doubled in the last few years. However, only a few of these countries, such as China are responsible for a huge share of the exports. Trade of other economies such as Nepal, Afghanistan, Laos, and Tajikistan are below the potential because of their weak policy, inadequate infrastructure, and other gaps. Thus, if the BRI project is successful, it will fill these gaps and boost internal commerce.
It takes about a month to ship goods from China to Europe, and most of the goods are transported by sea. The good thing about shipping goods by train cut the transit time in half but will cost more. In this case, there is a tradeoff between saving money and time. Each day’s delay in getting items from the factory gate to the consumer is likely to reduce the trade by one percent.
Improving the network and capacity of railways and other transport infrastructure is likely to result in increased investment, cross-border trade, and improved growth in BRI economies. You should note that regional cooperation on the infrastructure improvements is required to solve this given challenge. If the project becomes successful, it will become easier to trade with the world’s vital economic corridors…