The Spillover Effects of Institutional Quality and Economic Openness on Economic Growth for the Belt and Road Initiative (BRI) countries

Several studies have been conducted to investigate the factors that influence Economic Growth (EG). However, the spatial impact of Institutional Quality (IQ) and Economic Openness (EO) was primarily disregarded, especially in BRI countries; only a few research offered proof of institutions' involvement in boosting economic development. In this article, we increase the existing research on whether neighboring countries' EO and institutions may also affect EG. Thus, we examine the spillover impact of IQ and EO on EG in a panel of 86 BRI economies over the period 1995-2019 using a Spatial econometric model. Our findings first prove the existence of spatial dependence in EG across nations. Secondly, the results also provide an indication of indirect institutional and EO spillovers. Institutions and EO inside a country contribute to its prosperity and growth and, as a result, have a beneficial spillover impact on the economic development of its neighbors. The BRI policy positive spillover effect on EG in the BRI allied countries and, consequently, create positive spillover effects on the economic development of neighbors. The best model is interpreted with a direct and indirect impact. Finally, the study ends with various policy recommendations for BRI nations regarding the effects of institutions, EO, and spillovers on growth. (C) 2021 Elsevier B.V. All rights reserved.

Automated summary

This article investigates the spillover impact of Institutional Quality (IQ) and Economic Openness (EO) on Economic Growth (EG), finding that there is spatial dependence in economic growth across nations and that institutions and economic openness have positive spillover effects on the economic development of neighboring countries.