The Role of China's Belt and Road Initiative in African Development

Abstract

This study investigates the macroeconomic implications of China’s Belt and Road Initiative (BRI) in eight African nations from 2013 to 2023, focusing on how domestic absorptive capacity moderates its effectiveness. Employing fixed-effects panel regression models with interaction terms, the analysis reveals that BRI investment correlates positively with FDI inflows, while its effect on GDP growth becomes significant only in countries with higher absorptive capacity. Empirical findings indicate that BRI investment significantly boosts FDI inflows and exhibits a weak positive relationship with GDP growth. More notably, countries with higher levels of absorptive capacity, measured by tertiary enrollment, electricity access, internet penetration, and government effectiveness, experience stronger economic returns from BRI-related investment. The evidence of path dependency is limited, suggesting that present institutional readiness plays a more decisive role than historical capacity accumulation. These results highlight the importance of aligning external infrastructure investment with domestic capacity-building. The study recommends that African governments strengthen institutional frameworks, invest in human capital, and improve infrastructure readiness to fully capitalize on BRI participation. By integrating absorptive capacity into macroeconomic evaluation, this research advances the literature on South–South development cooperation and provides actionable insights for both policymakers and Chinese stakeholders.