China's Digital Silk Road investment effect: a boon for European countries or a danger to security?
by Ping Lv; Pengqi Liu; Waner Xu
European J. of International Management (EJIM), Vol. 23, No. 2/3, 2024

Abstract: In recent years, some European countries worry that China was using the Digital Silk Road (DSR) to enable recipient countries to adopt its model of technology-enabled authoritarianism, which would be detrimental to national security in those countries. This paper evaluates the DSR investment effect of the Belt and Road Initiative (BRI) using the Difference-in-Difference-in-Differences (DDD) model by exploring country-sector-year panel data based on the China Global Investment Tracker database from 2005 to 2018. Our study finds that the BRI has significantly increased DSR investments by Chinese enterprises in the BRI countries of Europe without causing a significant rise in questionable transactions. Therefore, the 'A Danger to Security' narrative that the DSR aims to take over European recipient countries' sovereignty through technology financing is not supported by evidence. Discussions on sub-samples reveal that the BRI mainly promotes state-owned enterprises' DSR investment and that the preferred entry mode is cross-border merges and acquisitions. The findings help enrich the understanding of the investment effects of DSR and the understanding of micro-foundations toward internationalisation from an empirical perspective.

Online publication date: Thu, 23-May-2024

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