Need a perfect paper? Place your first order and save 5% with this code:   SAVE5NOW

China Belt and Road Construction in Laos


In a discussion with visiting Laotian Prime Minister Thongsing Thammavong in April 2014, Chinese President Xi Jinping emphasized the importance of China and Laos intensifying their complete partnership agreement in order to realize their national goals. President Xi specifically stated that Sino-Lao relations should be focused on strategic areas such as energy production extraction, ecological tourism, and infrastructure investment. Prime Minister Thammavong reaffirmed Laos’ devotion to China’s “Belt and Road” massive projects in exchange.

Laos’ main national development goal is to lift its millions out of poverty and, in so doing, graduation from the UN’s Least Advanced Nations group (LDCs). Although Laos presently has a GDP growth rate of nearly 7%, this growth is characterized by low employment sectors such as hydropower. As a result, the Laotian approach reduces poverty by creating jobs as a result of mechanization, and it realizes that modernizing the economic growth is critical to the success of the industrialization effort. The efforts to industrialize and modernize Laos are critical, with 90,000 Exhibited different entering the labor market each year. As a result, the Laotian government applauds China’s “Belt and Road” infrastructure major infrastructure projects, which are expected to assist Laos in accomplishing these goals.

Review of the Literature

The Chinese “Belt and Road” infrastructure and energy connectivity construction activities in Laos will establish on earlier energy and transport infrastructure improvements launched by the Asian Development Bank (ADB) in the 1990s as part of the Greater Mekong Subregion (GMS) program, which aimed to incorporate the financial systems of the Economic corridor countries (Cambodia, Laos, Myanmar, Thailand, and Vietnam) and the southern Chinese regions of Guangxi and Yunnan. Certainly, China’s “Belt and Road” megaprojects in Laos should be seen as a continuation of the ADB’s previous Laotian projects. Because the ADB is a US-controlled international financial organization (IFI), China’s present economic clout in Laos and the region has alarmed Japanese concerns over the decline of their clout, as we’ll see.

A noteworthy example of the ADB’s cooperation with the GMS region is the North-South Economic Corridor (NSEC) project that links Yunnan with Thailand through Laos. The NSEC has enabled a surge in trade between China and the GMS economy, with Laos operating as the primary transit point gateway. This surge in commerce has been associated with an increased Chinese commercial presence in Laos, which includes likely to escalate owing to increased Chinese investments under the “Belt and Road” architecture. In geopolitical standpoint, China’s economic links with Laos originate from the precolonial Lao kingdom of Lan Xang, which obtained wealthy from trading with the Chinese Muslim caravan trade. The present emigration and installation of Chinese entrepreneurs and businesspeople in Laos following the formation of the NSEC parallels the movement of Chinese settlers into Laos during the later French colonial period

Laos’ strategic geographic location has made it one of the most popular destinations for Chinese FDI (FDI). In 2014, China was Laos’ largest investor, with over $5 billion invested in the country.

China has also become Laos’ largest export market, with bilateral trade between the two countries reaching 3.6 billion USD in 2014, up 32% from the preceding year. With Laos’ participation in the “Belt and Road Initiative,” this is expected to grow. For instance, the Chinese multinational CITIC will spend over 700 billion RMB in China’s “Belt and Road” projects, which include Laos. (Shao et al.,2018) Chinese FDI in agricultural production, hydroelectric power, mineral extraction, wood products, and tourist industry (including casinos) fits with the Laotian state’s “going to turn countryside into capital” growth plan, which dates back to the 1990s and involves monetizing land through lease agreements and resource exploitation. The advent of Chinese investment and know-how was encouraged by the Laotian government, as it was anticipated that the economic system would profit not only from extra income, but also by the creation of employment opportunities that would result from the methods of teaching and learning from Chinese experts, particularly in order to get the best methodologies for the optimum solution profiteering of Laos’ environmental assets. The 2000s rubber rapid growth is a prime illustration of Sino-Lao partnership, as partnerships between Lao state firms and Chinese companies supplanted indigenous opium trade with marketing rubber plantations ( Lenger,2019). The Laotian economic system benefited from the commercial agricultural revenue, but the local labor force also benefited from regular wages and increased their agricultural expertise.

By substituting cabs and other modes of transportation, railway transit might efficiently relieve traffic congestion in large cities while conserving energy and decreasing emissions. While using the smallest dependency on fossil fuels possible for passenger and cargo transport, greater trains lead to energy preservation and emission reduction. Any one-sided analysis of the impact of transportation infrastructure investment on the economy or the environment violates the idea of sustainable development (Chen et al.,2018). Despite the existence of studies on the synchronized economic, environmental, and societal advantages of infrastructure improvements, research on the holistic effects of mobility spending on infrastructure on the ecosphere is still in its infancy. The following are the most commonly utilized evaluation approaches in transportation capital spending research.

The technical efficiency approach is currently the most generally utilized study method in relevant research on the growth effects of road infrastructure, with Cobb-Douglas level of output being one of the most frequently used. The simultaneous equation technique was primarily used in the literature review: after separating road infrastructure capital from total capital as an independent type of capital, the output volatility and appropriate scale of transportation systems were assessed using a production function. The technical efficiency model was used by Aschauer and Munnel to investigate if infrastructure may aid promote economic growth. The second goal was to investigate the spatially beneficial effects of transportation networks based on the production functional, as well as to improve the link between railway network economic growth or increased productivity (Chen et al.,2018). Apart from the fiscal implications of transportation systems, Liu and Cantos et al. noted that transport system is likely to aid the migration of economic activity from the region to its surrounding areas, resulting in an economic spillover effect. The Co Integration Analysis (DEA) approach is an analytical tool for developing index systems. This is a high-level overview of the DEA methodology.


Model of Range-Adjusted Measurement (RAM)

Before kicking off the research, it is in order to evaluate the economic contribution of the infrastructure and environmental efficiency. The Ram model is not limited to solving the traditional information or data,non-relaxation variables ,radial issues .However, it also possess a structure that is additive in allowing achievements of independent efficiency measurement. As a result, this article cites the RAM model to evaluate mobility infrastructure’s combination economically and environmentally efficiency, as well as the amount of funding in mass transit in China. The degree of traffic spending on infrastructure assessed in order to achieve sustainable growth is more reasonable than traditional measurement standards, and it may provide a more comprehensive and accurate picture of China’s current level of transportation infrastructure investment.

The Belt and Road Initiative

The degree to which a manufacturing structure has been given supererogation; the degree to which a production structure has been streamlined. Infrastructure investment in transportation The effectiveness of transportation infrastructure in the environment, as well as a unified economic and political system The foundation for business is improvements and revolutions. Indirect action affects the angle, radial, and nonrelaxation parameter difficulties in the existing data envelopment analysis model, but the model also has an additive structure to accomplish individual efficiency measured data compared to expected and unsavory output, and integrate and add the independent efficiency of the two (Babbie,2020). As a result, in this article, the RAM model was used to calculate the combined economic and environmental efficiency of transportation infrastructure, as well as the level of infrastructural investment in The region. The level of transportation infrastructure investment defined in terms of sustainable development is more reasonable than traditional measurement standards, and it may be utilized to provide a more full and accurate assessment of China’s current transportation infrastructure investment.

Selection of indicators and data sources:

The metrics and information sources for measuring transportation infrastructure’s unified efficiency of economics and environment were chosen based on the characteristics of transportation infrastructure and research findings in the literature, as shown in Table 1. The study employed panel data from 30 provinces and cities other than those stated from 2007 to 2018 due to a lack of data in Tibet, Hong Kong, Macau, and Taiwan. Difference in Differences Model (DID)

The difference approach can be used to obtain the efficiency difference before and after the proposal, in order to analyze the effects of the Belt and Road Initiative on the unified economic and environmental efficiency of transportation infrastructure in China. However, other policies or events that influence efficiency before and after the Initiative are suggested may be missed by the difference technique, resulting in an overestimation of the Initiative’s impact. As a result, a more scientific method, known as Difference in Difference, was used to examine the effects of the Belt and Road Initiative on the overall economic and environmental efficiency of transportation infrastructure.

Model of Mediation

This paper used mediation models with the status of industrial structure transformation and upgrade as the mediating variable to see if the Belt and Road Initiative can improve transportation infrastructure’s unified economic and environmental efficiency by transforming and upgrading the industrial structure.

Discussions and Findings

The three aspects of transportation infrastructure efficiency were examined over time to evaluate how they evolved at the national and regional levels before and after the Belt and Road Initiative. As shown in Figure 2, the country’s total economic efficiency grew steadily from 2007 to 2018, with minor changes along the way. In 2009, economic efficiency dropped dramatically, possibly as a result of the Chinese government investing RMB 4000 billion in transportation infrastructure to drive economic growth and mitigate the impact of the international financial crisis, while industry growth slowed due to policy lags, resulting in redundant capital investment and lower economic efficiency. From 2010 to 2012, economic efficiency rose gradually as transportation value added and overall conversion turnover both increased significantly after 2010. The economic efficiency of China’s transportation infrastructure decreased slightly in 2013, possibly as a result of the Chinese economy entering the “new normal” stage following a series of economic reforms and industrial upgrading, resulting in a drop in transportation infrastructure economic efficiency. Because to the effects of economic reforms and the Belt and Road Initiative proposal, economic efficiency rose steadily after 2013.

In terms of regions, the overall trending of transportation infrastructure economic efficiency in regions not along the routes and those along the routes was similar to that of the countries as a whole, but prior to 2013, the economic efficiency of regions not along the routes was higher than that of regions along the routes, because these regions included the more developed provinces in central and eastern China. The economic effectiveness of transportation infrastructure in the regions along the routes, which included underdeveloped western provinces, was low, but this has substantially improved since 2013, which is amazing. The Belt and Road Initiative is credited for increasing the economic efficiency of transportation infrastructure in regions along the routes, which has begun to surpass that of non-route regions.


We might deduce that China employs its economic clout to attain its strategic and geopolitical objectives. From an economic standpoint, the BRI facilitates international cooperation and connectivity while also meeting Chinese needs. These projects may also suit the interests of the afflicted countries, as we can see in the example of Laos. Although, through these initiatives, particularly the financial-loan structures, Beijing may be able to influence the host countries’ decision-making processes or obtain even greater benefits. Laos is on the verge of indebtedness as a result of its growing financial dependence on China, and if these infrastructure projects fail to produce the expected benefits, the country may find itself totally exposed to Chinese objectives. While there are reservations about the cooperation, the Lao government remains convinced that the initiative (particularly the railway and other infrastructure projects) will help the country overcome its geographical disadvantages and transform itself into a regional interconnector and economic hub.


Babbie, E. R. (2020). The practice of social research. Cengage learning.

Chen, S. C., Hou, J., & Xiao, D. (2018). “One Belt, One Road” Initiative to Stimulate Trade in China: A Counter-Factual Analysis. Sustainability10(9), 3242.

J. Gong and Z. M. Yin, “The effect of railroads on trade along the belt and road initiative: a heterogeneity stochastic frontier model analysis based on transportation time and distance,” Journal  of International Trade, no. 2, pp. 14–25, 2016.

Lenger, A. (2019). The rejection of qualitative research methods in economics. Journal of Economic Issues53(4), 946-965.

Shao, Z. Z., Ma, Z. J., Sheu, J. B., & Gao, H. O. (2018). Evaluation of large-scale transnational high-speed railway construction priority in the belt and road region. Transportation Research Part E: Logistics and Transportation Review117, 40-57.

Y. Liu, “Transport infrastructure investment, regional economic growth and the spatial spillover effects: based on highway and marine’s panel data analysis,” China Industrial Economics, vol. 12, pp. 37–46, 2010.View at: Publisher Site| Google Scholar


Don't have time to write this essay on your own?
Use our essay writing service and save your time. We guarantee high quality, on-time delivery and 100% confidentiality. All our papers are written from scratch according to your instructions and are plagiarism free.
Place an order

Cite This Work

To export a reference to this article please select a referencing style below:

Copy to clipboard
Copy to clipboard
Copy to clipboard
Copy to clipboard
Copy to clipboard
Copy to clipboard
Copy to clipboard
Copy to clipboard
Need a plagiarism free essay written by an educator?
Order it today

Popular Essay Topics