Speech by Margit Molnar
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E-mail China.org.cn, September 22, 2016
Name: Margit Molnar, Chief China Economist, Organization for EconomicCooperation and Development
Title: Realizing Synergies in Multiple Dimensions Under the Silk Road Initiative
Abstract:
The Silk Road or the Belt and Road Initiative borrows its name from the ancient Silk Road, which was a major trade artery, but the new initiative goes well beyond trade. As it evolves, it is becoming more like great-scale integration in multiple dimensions encompassing nearly two-thirds of the world population and nearly one third of world GDP. Given the scale of participation, significant synergy is expected to be reaped owing also to the network effect. Even more importantly, the initiative bodes well with China’s current Five-Year Plan and is expected to reinforce the plan’s major principles of innovation, coordination, green development, openning-up and sharing.
Cooperation along the sea road and land belt means increasing openness through more intensive trade relations, enlarged foreign direct investment, and tighter collaboration across a wide range of areas including financial stability and regulatory harmonisation. A crucial prerequisite to enhance integration along the Belt and Road is better quality and more infrastructure, the creation of which per se can enhance interdependence in trade, investment, etc. Demand for infrastructure in Asia is insatiable. Infrastructure development features in all national visions and development strategies. Infrastructure creation itself boosts growth not only to the extent it contributes to the capital stock, but beyond that it enhances the efficiency with which production factors are combined.
The Belt and Road Initiative will also facilitate shared development not only across countries along the Belt and Road but also China’s participating provinces, thereby contributing not only to greater regional/interregional integration, but also to a better integrated internal market in China. Collaboration across geographical regions allows for reaping the benefits of scale economies, thereby enhancing efficiency and boosting growth.
Obviously, collaboration across as well as within China’s borders within the Silk Road framework needs to be coordinated. This may facilitate more collaboration instead of competition across regions. Coordination across economies and regions will also enhance their resilience to external shocks.
There is also a potential that growth becomes greener as participating countries learn from each other how to promote more environmentally responsible behaviour. More collaboration can also lead to a better understanding of the common good nature of the environment.
Not least importantly, the Silk Road Initiative can also boost innovation. As the previous months have seen, collaboration has gone well beyond the traditional areas of trade and investment and has reached new dimensions when countries discussed a guiding document for enhancing intellectual property collaboration. Indeed, R&D and the producing of innovation outcomes are typically shared activities; international experience shows that most innovations are the result of collaboration.
The five principles of China’s current Five-Year Plan and by the same token the synergy realised along those principles in the framework of the Silk Road Initiative are tightly intertwined. Innovation is linked to cooperation, coordination, sharing, openness, and other principles of the 13th Five-Year Plan. Innovation can also be a way to achieve greener development along the Belt and Road.
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