Is Transportation Infrastructure Important to the One Belt One Road (OBOR) Initiative? Empirical Evidence from the Selected Asian Countries

Abstract

The One Belt One Road (OBOR) initiative is implemented to improve the linkage between China and its neighboring countries in terms of economic ties, connectivity, partnership, and security cooperation. The crucial challenge encountered in OBOR initiative is the different gauge standards from different countries in the development of railway along the Silk Road. Another issue arose from the regulation of education sector in the aspect of quality, cost, and efficiency. To the best of our knowledge, there is still lack of study on the transportation infrastructure and education towards the GDP in the selected Asian countries, especially for Central Asia. Therefore, this study aims to examine the impact of OBOR initiative and its importance towards economic growth by further investigating the determinants such as transportation infrastructure, education, labor, trade, and inflation rate. This study employs panel data analysis using the annual data from the period of 2000–2015. The selected Asian countries are divided into three regions, namely Central Asia (Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, Uzbekistan), ASEAN (Thailand, Indonesia, Vietnam, Malaysia), and East Asia (China, Mongolia). Besides, we use fixed effect model (FEM) to obtain the results based on the support of Hausman test and Poolability F-test. The findings reveal that transportation infrastructure possess a positive effect on GDP. Surprisingly, education is negatively related to GDP. With this, policy makers are suggested to encourage OBOR countries to expand and upgrade their system in terms of transportation infrastructure, human capital, culture, and education. In future studies, the advanced model is recommended to investigate the pre- and post-efficiency of OBOR initiative.