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New Research by Wen Shi Assesses Degree of Economic Integration between Laos and China

A new study by Turner College economist Wen Shin and her colleagues Wei Sun and Yi Zhao of Grand Valley State University empirically assesses the degree of business cycles synchronization and economic integration between Laos and China under the influence of the Belt and Road Initiative. To do so they estimate a two-country structural VAR model and apply sign restrictions to identify the structural shocks for 1984-2022. The study, which appears in the latest issue of the Journal of Management Policy and Practice, finds that China’s macroeconomic shocks have played a significant role in shaping Laos’ GDP and price level and that China’s influence is increasing over time. Our results suggest that Laos’ business cycles have become more synchronized with China’s under the influence of the Belt and Road Initiative, consistent with the overall literature of Belt and Road Initiative’s impact on the developing countries.

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