Leveraging the Belt and Road Initiative for Green Investments: The Case of Bangladesh

Abstract

Abstract Despite there being a well-documented need, as well as opportunity, to enhance foreign direct investment (‘FDI’) inflow to climate-friendly (‘green’) economic activities in Bangladesh, the reality portrays a stark contrast. Nowhere is it more obvious than the evolving investment relationship between China and Bangladesh under the Belt and Road Initiative (BRI). Originally under the rubric of the Bangladesh-China-India-Myanmar (BCIM) economic corridor, and later under the garb of the BRI, Chinese investments in Bangladesh have predominantly ended up in fossil fuel-based sectors. Even after the advent and expansion of the ‘green BRI’ initiative, reality has not changed much. This article offers an assessment of investment inflows from China to Bangladesh under the BRI umbrella against the backdrop of a growing green investment trend and the existing applicable legal framework. It finds that key legal and policy challenges that prevent leveraging of the BRI for green investment into Bangladesh include: an uncoordinated approach from the government, a disregard for the role of economic policy instruments for climate action, and politically motivated, as well as path-dependent decision-making with respect to investment promotion. This paper suggests that ambitious climate commitments combining economic policy tools, along with a more integrative and holistic domestic approach to climate action and investment promotion, can help shift the status quo.