Evaluating the Effects of the Belt and Road Initiative in Latin America

Abstract

This thesis examines the economic impact of the expansion of the Chinese Belt and Road Initiative in Latin America beginning in 2017. This thesis hypothesizes that The Belt and Road Initiative does represent a shift in economic policy from China toward Latin America, applying a staggered difference in differences and panel event study model to test the hypothesis. The null hypothesis is that there is no economic benefit to joining the BRI for Latin American countries. The results of this study fail to reject the null hypothesis by finding that the economic indicators testing the change attributable to joining the BRI are not significantly different from zero. Specifically, this study finds that BRI-member countries do not experience an increase in the quality of infrastructure after joining the BRI. Second, levels of consumption goods imported from China are not increased in BRI-member countries after joining. Third, levels of raw goods exported to China are not increased for countries that join the BRI.