FINANCIAL DEVELOPMENT AND INVESTMENT ATTRACTION IN BRI COUNTRIES: A COMPARATIVE ANALYSIS OF HIGH-, MIDDLE-, AND LOW-INCOME NATIONS

Abstract

The study examines the influence of financial development, trade openness, Foreign Direct Investment (FDI) inflows, regulatory quality, and economic freedom on economic performance and investment appeal among Belt and Road Initiative (BRI), nations. It utilises secondary data spanning 2003–2022, sourced from globally recognised institutions such as the World Bank and IMF. Singapore, Kazakhstan, and Pakistan represent high-, middle-, and low-income nations, respectively. Descriptive statistics reveal significant disparities, with Singapore excelling in GDP per capita, trade openness, and FDI inflows due to robust financial systems and governance. Kazakhstan demonstrates moderate progress, hindered by resource dependence and governance challenges, while Pakistan faces structural inefficiencies, weak financial development, and poor regulatory quality, severely restricting economic growth. Regression analysis confirms the substantial effect of financial development and regulatory quality on GDP per capita, though the impact varies across income groups. The findings underscore the need for tailored policy measures to address disparities, reinforce financial and regulatory structures, and foster sustainable economic growth within the BRI framework. This study thus offers actionable insights for policymakers to maximise the advantages of economic integration initiatives.