The Promoting Role of Digital Infrastructure Construction on Local Economic Development: Evidence from Belt and Road Countries

Abstract

Using a two-way fixed effect spatial econometric model, this study analyses the relationship between digital infrastructure development and economic growth in 65 countries participating in the Belt and Road Initiative from 2013 to 2023. The results indicate that a one standard deviation increase in digital infrastructure results in a 2.85 percentage point increase in annual per capita GDP growth, although this impact varied significantly across country categories. Middle-income economies are the strongest users of digital investments, demonstrating growth coefficients of 3.451 compared to 1.326 for low-income countries. From the analysis, three key transmission mechanisms emerged. These were: enhancement of productivity in the digital economy, accounting for 35 percent of total effects; the development of the innovation ecosystem contributing 28 percent; and trade facilitation at 22 percent. Spatial spillover analysis captures important positive externalities, where investments in digital infrastructure by neighboring countries result in an additional 0.43 percentage points of growth. This study argues that policies need to be tailored to different development levels and highlights the need for effective cross-border coordination frameworks focused on collective gains within the BRI context.