Chinese investment, anti-poverty and institutional improvement: evidence from the Belt and Road Initiative

Abstract

With the expansion of Chinese overseas investment, the local impact of Chinese investment arose much attention. Much research has found that Chinese investment has short term effect on local economic activities, employment and institution quality. However, relatively little attention has been paid to the poverty reduction effect of Chinese investment and how institution quality mediating the impact of Chinese investment on local residents’ wellbeing. Using data from Afrobarometer's public opinion survey and Global Chinese Development Finance Dataset, we show that active Chinese investment project under the Belt and Road Initiative can reduce the poverty level of residents nearby. Besides, we find that institution improvement enhance the poverty reduction effect of Chinese investment under the Belt and Road Initiative when we measure poverty as short of cash income, and institution improvement do not have impact on poverty reduction effect when we measure poverty using basic needs method and include more dimensions.