Analyzing the Expansion of China’s Infrastructure for Resources Model Across the Developing World

Abstract

As an alternative to loans from traditional lenders, China has begun to experiment with a financial model known as the Infrastructure for Resources (IFR) model. The IFR model is a model of infrastructure financing in which China sends their workers, equipment, and expertise to the recipient country in exchange for a portion of the future revenue of the resource development project. Despite the promising design of the model, China has only engaged in IFR deals with a few countries, all of which are in Sub-saharan Africa. This research determines the characteristics most in need of the IFR model based on previous literature, and then conducts case studies of one country in every developing region of the world to examine which regions are most in need of the model. For the methodology, quantitative case study analysis was conducted utilizing the economic indicators related to each problematic characteristic the IFR model targets. As for the findings, the best performing regions were Central Asia and Eastern Asia, which were represented by Kyrgyzstan and Mongolia, indicating that the IFR model would be of little benefit to these regions. The worst performing regions were determined to be Southern and Western Asia, which encompass the Middle East, as well as Latin America and the Caribbean. Considering this, China should consider engaging in IFR deals with countries in these regions, as infrastructure improvements would help give the regions the economic jumpstart they need to fuel domestic improvements.