China's Infrastructure for Resources Model: Case Studies of Bolivia and Argentina
DOI:
https://doi.org/10.47611/jsrhs.v12i4.5258Keywords:
Infrastructure for Resources, Foreign direct investment, Resource curse, Economic growthAbstract
China’s Infrastructure-for-Resources (IFR) model is a framework for capital allocation in African infrastructure whereby the loans used to finance projects are repaid through natural resources. The model is designed to combat the resource curse, which is a situation in which a resource-rich country underperforms economically having valuable resources. China has used the IFR model to finance projects throughout Africa, but never in other countries or regions. This research combats this gap by identifying the feasibility of an expansion of the IFR model to Bolivia and Argentina, following the research goal of identifying how much Bolivia and Argentina would benefit from China’s IFR model of foreign direct investment. Case study analysis of Bolivia and Argentina was conducted, including quantitative analysis of economic indicators and qualitative analysis of the country’s geopolitical environment. The model was demonstrated to be minimally beneficial at combating the resource curse in Argentina because while it would provide a much-needed inflation-free alternative to traditional forms of investment, the model would not affect most aspects of the resource curse. In Bolivia, the model was demonstrated to be sufficiently beneficial because of Bolivia’s widespread corruption, which the model combats by transferring the funds to the construction company rather than the corrupt government. For this reason, China should consider expanding the model to Bolivia, and potentially to other countries with similar economic conditions. Looking forward, this research highlights a potential expansion of the IFR model and the possibility for the expansion of models of foreign direct investment in general.
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