Insight: The Impact of Global Economic Governance on Low and Mid-income Countries

This is an insight written by Erin Rao on the recent Bahá’í Chair for World Peace panel on The Impact of Global Economic Governance on Low and Mid-income Countries, co-sponsored by the College of Behavioral and Social Science on April 9,  2019.

Before attending this panel, I knew very little about economic development narratives in low- and mid-income countries. Although the topics discussed by speakers Uzma Ashraf Barton and Simone Raudino were very dense and complex, I left the panel with a better understanding and appreciation for the competing perspectives in global economic governance.

One of the topics discussed in this panel that I found interesting was China’s growing influence the East. The panelists briefly spoke about China’s Belt and Road Initiative (BRI). According to the World Bank, the BRI is “an ambitious effort to improve regional cooperation and connectivity on a trans-continental scale” (2018). To my understanding, China is attempting to increase its economic influence in central Asian, Europe, and Africa by investing in infrastructure development.

The panelists discussed how developing countries in Asia are more willing to join the BRI because to get investments from the World Bank, they must meet several strict ethical standards. Because China offers billions of dollars in loans with far fewer restrictions, there is a larger incentive for developing countries (especially non-democratic countries) to borrow money and create alliances with the Chinese government.

However, I wonder if China’s high willingness to loan is very risky. Although fewer loan restrictions mean that more countries are more willing to join the BRI, several of these countries are overridden by corruption and conflict. Thus, there is a high possibility that these countries will be unable to pay off their loans. Several economists have voiced their concern that the BRI may suffer from unsustainable debt in the long-run. I am very interest to see how China’s loan strategy in the BRI will play out in the future.

One of the panelists also brought up the question of the environmental impacts of the BRI. Starting in 2013, China’s BRI has funded a new highway in Pakistan, a sea port in Sri Lanka, and a new railway in Nigeria. As the BRI continues to fund large-scale infrastructure projects, how will China or international institutions monitor the environmental side effects? Will infrastructure construction provide economic growth to the region at the expense of polluting the environment? Will the BRI perhaps even accelerate the process of global warming around the world?

These are just a few of the questions I was left to ponder with after attending this panel. But one thing is for sure: China’s growing influence is challenging the status of the United States, which has the lone international superpower for the past few decades. As isolationism is trending the United States, they are investing less internationally and slowly losing influence around the world. The BRI is China’s way of leveraging power to become a global leader. By building relationships and taking control of global trade, China is well on its way.  

  1. The World Bank. (2018, March 29). Belt and Road Initiative. Retrieved from

About the Author:

Erin Rao is a freshman at the University of Maryland, College Park. She is planning on double majoring in Finance and Information Systems in the Robert H. Smith School of Business. After graduation, Erin is interested in working in the field of consulting.

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