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Accepted Paper:
Diversifying away from extractives: The Belt and Road Initiative, Chinese investment and industrialisation in the Kyrgyz Republic
Linda Calabrese
(ODI, King's College London)
Considering the impact of China’s BRI in Kyrgyzstan, this study finds that the BRI has had limited impact on manufacturing development, despite the presence of open markets and of infrastructure finance. It suggests the causes lie in the disinterest of the government towards manufacturing.
Paper long abstract:
With its infrastructural offer and emphasis on connectivity, China’s Belt and Road Initiative (BRI) promises to support developing countries aiming to structurally transform their economies and industrialise. The literature on industrialisation has identified a key role for infrastructure, markets and the state to promote manufacturing development. This article asks under what conditions the BRI can support structural transformation, and looks at the case of Kyrgyzstan, one of the first countries to join the initiative, to identify key factors in the structural transformation process. Using a case study approach and combining in-country interviews with a vast review of the literature, this study finds that the country has made little progress towards structural transformation, despite the presence of open markets and the availability of infrastructure finance. It suggests that this is because the government has not steered resources towards industrialisation and only made timid attempts to promote transformation. The article suggests that an emphasis on the role of the state, rather than on the market or infrastructure, is needed to explain the progress (or lack thereof) in terms of structural transformation under the BRI.