The Belt and Road Initiative (BRI) is a major undertaking of the Chinese Government to link countries across Asia, Europe, Africa, and Oceania via a series of overland and marine infrastructure projects. Originally proposed by Chinese President Xi Jinping in 2013 the Initiative has expanded its geographic scope to include all countries as well as regional and international institutions. Successfully implemented the BRI will have far-reaching implications for participating countries as well as for the global economy. Several countries in the Caribbean have already signed on to the Initiative including Trinidad and Tobago, Jamaica, Barbados, and Guyana. This presentation seeks to lay out the basic tenets of the BRI and discuss its implications for trade and investment in the Caribbean. While the BRI could potentially contribute to increased trade and investment in the Caribbean there are inherent risks to participation. These must be clearly understood. Drawing on the experiences of countries outside the Region this paper will discuss some of the issues that have arisen in the planning and implementation of BRI projects around the world. This analysis is intended to inform the decisions made by Caribbean government policy makers and individual firms on engagement with the BRI. The presentation will also discuss a new approach to development assistance proposed by the United States in response to the BRI and examines whether it represents a viable alternative for countries in the Caribbean.
This paper considers the prospects and promises of continent‐wide infrastructure projects under China's Belt and Road Initiative (BRI), and its implications for intra‐regional trade and economic development in Africa. Building on the supply side theory of trade and economic development, and taking cognizance of the impacts of asymmetric market sizes on trade integration, this paper argues that continent‐wide infrastructure projects are perhaps not the biggest constraints to intra‐Africa trade. Consequently, the paper recommends caution in pursuing regional infrastructure projects under the BRI. Given that the economies of most African countries depend largely on natural resources, the BRI could be adopted strategically to establish and manage infrastructure projects that would relax the binding constraints to structural transformation and allow for the development of manufacturing and/or service capabilities in the respective countries, especially in niche areas.
While cultural distance (CD) is a popular construct in international business (IB), most studies confound the distance and country profile effects. There is an ever-growing debate on measurement issues and distinguishing the effect of doing business in countries with different cultural profiles. While the vast majority of studies focus on the implications of CD, the objective of this study is to investigate how the cultural profile in the host country affects the financial performance of foreign subsidiaries in Latin America. We employ a quantitative approach with panel data, including over 4200 firm-year observations of the same foreign subsidiary firms in the 10 largest economies in Latin America. We measure cultural profile of the host country using the four original dimensions of Hofstede's framework. Then, we estimate the effects on the financial performance of foreign subsidiary firms using the original scale and by splitting the scale (e.g. degree of masculinity vs degree of femininity) to compare the effects of the opposite poles of the cultural dimensions. The findings reveal that certain cultural characteristics in the host country profile (e.g., individualism and femininity) positively impact performance. In contrast, other cultural traits have a negative (masculinity and collectivism) or no significant impact (uncertainty avoidance). Also, the firms can adjust positively to high and low power distance scores in the host country. This study offers novel insights into the implications of national culture for financial performance by showing that the host country's cultural profile significantly impacts foreign subsidiary firms' performance.
Some 20 years ago, Shenkar (2001) criticized several of the underlying assumptions of the cultural distance (CD) construct. Despite this, researchers continue to use the same metric which fails to address many of the underlying problems. As a result, CD studies seem to generate results which are often contradictory. Rather than rejecting the distance metaphor, the main objective of this study is to provide a more in-depth measure of CD that addresses the assumptions of linearity, symmetry, equivalence, and discordance. We propose that, while the size of the cultural distance between home and host countries may be relevant for some dimensions, it is incomplete, as it does not account for the distinct characteristics of the cultural dimensions, the direction toward countries with different profiles and the contextual settings of the study. We test our hypotheses on a sample from the Orbis database consisting of foreign subsidiary firms from Latin America, other emerging markets from outside the region, and from developed countries operating in 10 of the largest economies in Latin America. Our dataset includes 4226 firm-year observations and a combination of 168 home and host countries. Latin America provides a suitable context for this study, not only because of the diversity of firms from different contexts operating in the region, but also because the region allows us to investigate the influence of home country history and tradition on firms' ability to conduct business in different cultural contexts. Our assessment of CD shows in a precise manner that size together with direction might be adequate for describing the effects of some dimensions of CD on firm performance, while for other dimensions, it is clearly a matter of country profile. By combining our metric with different national culture frameworks, future studies would be able to complement and strengthen our findings and conclusions.
