The Belt and Road Initiative and firms’ markups: evidence from China

This paper examines the impact of the Belt and Road Initiative (BRI) on firms’ markups using a difference-in-differences model and data on A-share listed companies in China from 2011 to 2024. Results indicate that the BRI significantly increases firms’ markups, and this finding remains robust across a series of sensitivity tests. Mechanism analysis reveals that the BRI enhances markups by reducing operating costs and alleviating financing constraints. Heterogeneity analysis further shows that the effect is more pronounced among non-emerging industries, high factor-intensive firms, state-owned enterprises, small-scale firms, and firms in provinces along the Maritime Silk Road. This paper shows a new perspective in understanding the microeconomic effects of the BRI from the perspective of firms’ markups, and also provides new ideas for promoting the implementation of the BRI.