Developing information and communication technology with the belt and road initiative and the digital silk road

Abstract

This paper examines the impacts of the Belt and Road Initiative (BRI) on the information and communication technology (ICT) development of participating economies. ICT development is measured with internet penetration, mobile penetration, broadband subscription, and telephone subscription. The causal effect of the BRI on ICT development is estimated using a propensity score reweighting difference-in-differences (DiD) model. We find that the participating economies experience a significant rise in ICT development. A country's participation in the Digital Silk Road (DSR) in addition to the BRI further increases its ICT development and increases its participation in global ICT value chains relative to their BRI-only counterparts. Overall, the benefit of participating in the BRI on ICT development is enhanced by participating in the DSR. However, there are unequal trade creation effects between China and the rest of the world. The participating economies increase their imports of computer and information services more from and increase their imports of communication services less from China than from the rest of the world after the participation. These results are robust to a parallel trend test, alternative ICT measures and alternative estimation methods. Finally, we highlight the implications of our results for policy makers in developing countries who want to improve their ICT development and to engage in global ICT value chains, and for academics in developing future research to evaluate these initiatives at the macro- and micro-levels.