China's Belt and Road Initiative in a Global Context

Volume I: A Business and Management Perspective

Jawad Syed, Yung-Hsiang Ying, Jawad Syed, Yung-Hsiang Ying

• Publisher: Palgrave Macmillan
• Year: 2019
• ISBN:
  9783030147228
• Topic: Business
• Subtopic: International Business
• Index: Business

Bringing together a collection of interdisciplinary chapters on China's Belt and Road Initiative (BRI, or also known as One Belt One Road), this book offers a comprehensive overview of the topic from a business and management perspective. With contributions from scholars based in Asia, Europe and North America, Volume I provides theoretical and empirical analysis of the opportunities and challenges facing businesses in relation to BRI. Key areas covered include economics and finance, history, trade, value chain and human resource and cross-cultural management, creating a useful tool for academics, as well as policy-makers and practitioners in China and other countries along the new Silk Road.

© The Author(s) 2019

J. Syed, Y.-H. Ying (eds.)China’s Belt and Road Initiative in a Global ContextPalgrave Macmillan Asian Business Serieshttps://doi.org/10.1007/978-3-030-14722-8_1

Begin Abstract

1. Introduction: Diversity, Convergence and Opportunities Along the Belt and Road

Jawad Syed¹ and Yung-Hsiang Ying²

(1)

Suleman Dawood School of Business, Lahore University of Management Sciences, Lahore, Pakistan

(2)

National Taiwan Normal University, Taipei City, Taiwan

Jawad Syed (Corresponding author)

Email: [email protected]

Yung-Hsiang Ying

Email: [email protected]

Keywords

Human capitalIncome convergenceInfrastructureSocioeconomic diversity

End Abstract

Overview

The Belt and Road Initiative (BRI, also known as One Belt One Road or OBOR) was launched in 2013 by Chinese President Xi Jinping as a development strategy and framework that focuses on connectivity and cooperation between China and regional countries. It consists of two main components, the land-based ‘Silk Road Economic Belt’ and the ocean-based ‘Maritime Silk Road’. China is implementing the initiative through Asian Infrastructure Investment Bank, Silk Road Fund, and other public and private financial institutions.

This edited book, China’s Belt and Road Initiative in a Global Context: A Business and Management Perspective, comprises interdisciplinary chapters on BRI focusing on topics as diverse as macro-economy, business environment and strategy, cross-cultural management, human resource management, finance, trade, logistics and supply chain, history and diplomacy. Written by scholars from China, Pakistan, Taiwan, Europe, and North America, the book includes theoretical and empirical chapters exploring business and management opportunities and challenges related to BRI. The chapters explain the scope of the BRI as the mega business and development project and framework initiated by China, focusing on connectivity and cooperation among regional countries in South, Southeast and Central Asia, Middle East and parts of Europe, and Africa including more than 68 countries.

There have been debates across the world regarding different facets of the BRI; however, its business and management aspects remain under explored. The book highlights the essence and global implications of BRI by identifying the convergence of interests in terms of business, economic and social development, and political and cultural exchanges. The book takes into account the business and economic approach and the parallel cultural exchange approach inherent in BRI.

BRI is an ambitious project aimed at spurring the growth of Chinese economy and linking it with the economic growth of regional countries. However, it is natural to probe and analyze how such a vast project provides adequate business and management processes and sustainability measures.

The chapters in this volume shed light on both core and specific interests of individual countries for participation in BRI projects and examine BRI’s implications. The authors elaborate in the chapters the challenges, opportunities, principles, and processes of business and management for BRI projects. The authors provide China’s and other countries’ perspectives highlighting the significance of reviving the ancient Silk Road connectivity that extends on the world map, linking East with the West.

The book will be of equal interest to policy makers, government officials, practitioners, entrepreneurs, consultants, businesspersons, strategic analysts, journalists, academics, and students in China and other countries along the Belt and Road. Within academia, the book will be of specific interest to research scholars, academics, and students in international business, cross-cultural management, trade, finance, strategy, and international policy.

Connectivity is a key concept used by Chinese leadership in defining the BRI. This term is referred to not only in terms of building and improving transport, communications, and energy infrastructure to facilitate trade and investment but it also refers to improving cross-border trade, information exchange, and financial connectivity such as in the shape of currency swaps, the issuance of RMB (Chinese yuan)-denominated bonds, and cooperation in financial regulation. In much broader terms, Chinese policymakers link connectivity with economic development and, by extension, security and stability (NDRC, 2015).

However, in order to achieve this ambitious goal of connectivity, it is important to understand the socioeconomic diversity and convergence within the countries along the belt and road.

Socioeconomic Diversity and Prospects

The ultimate goal of BRI is to construct a platform to facilitate regional trade, promote financial openness, and enable economic development of the participating countries. This reminds us about what happened during the formation of Economic and Monetary Union (EMU) in Europe decades ago. The EMU initiative may be traced back as early as European Economic Community (EEC) in 1957. It took almost half a century for 11 countries to finally meet the stringent criteria to become initial members of EMU in 1999, and they gave up their own currencies in 2002 to fully adopt Euro. The number of stakeholders and the complexity of BRI are just as challenging as they were in EMU. It is therefore of crucial importance to investigate the diversity of participating countries of BRI from various perspectives, such as the standard of living and the quality of human capital.¹ In 2017, the per capita income of BRI countries ranged from $1700 (Bangladesh) to $65,000 (Qatar). The substantial gap of income between the BRI countries is a long-standing phenomenon. In contrast to this heterogeneity, the experiences and income levels of participating countries of the North American Free Trade Agreement (NAFTA) and EMU are relatively similar. Arguably, with similar income backgrounds and, in turn, similar standards of living, it is easier to build mutual understanding and cultural harmony across societies and countries. Seen from this angle, the significant income gaps within BRI countries may be a potential challenge to the implementation and stability of the system.²

There are in total 69 countries in BRI (and the number continues to grow). It is challenging to collect entire data for these countries. Other than the missing data problem, the extant data contains a great extent of inconsistencies. We managed to extract data from various sources including the Conference Board 2018, World Economic Forum, and World Bank. In total, 41 countries’ data were available for over 20 years to analyze. Among them, there are 28 countries with almost 50 years’ data accessible for analysis. To understand the convergence or divergence of incomes in BRI countries, Fig. 1.1 is presented to depict the relationship between average GDP (gross domestic product) growth rate from 1971 to 2016 against the initial real per capita income (in logarithmic form) at 1971 for 28 countries. It is interesting to see that South Asian countries such as Myanmar, Thailand, Vietnam, India, and Indonesia started at a lower income in 1971 but have exhibited sustained and high growth. It is also noteworthy that South Korea also started off poor but has enjoyed nearly 6% of growth on average for four decades. Within the Persian Gulf, Qatar, United Arabic Emirates, Kuwait, and Saudi Arabia have shown much higher income than other countries in BRI since the 1970s. Overall, Fig. 1.1 shows a clear phenomenon of unconditional convergence of income over past four decades.

Fig. 1.1

Income convergence in BRI, 1971–2016. Source: Total Economy Database of the Conference Board (2018). Note: Data are extracted from Total Economy Database of the Conference Board (2018). Mean Growth denotes the average growth rate of real GDP between 1971 and 2016. Income is measured as real income per capita based on purchasing power parity in 2011. Initial income level for year 1971 in the X-axis is in logarithmic form (Data for the following 41 countries was available and its analysis included in this chapter (Abbreviation and Country Name): ...