PhD Defence: Ismaël Ouedraogo
Room 219
PhD Defence. Geopolitical Distance and International Economic Relations: An Analysis of Bilateral Trade, Development Aid, and Chinese Foreign Direct Investment.
Ismaël Ouedraogo
CERDI, Université Clermont Auvergne
Examiners
Antonio Savoia, Professor, Université de Manchester, Royaume-Uni.
Catherine Bros, Professor, Université de Tours, LEO, France.
Gilles Dufrenot, Professor, Université d’Aix-Marseille, AMSE, France;
Mary-Françoise Renard, Emeritus Professor, Université Clermont Auvergne, CERDI.
Abstract
This thesis explores the impact of geopolitical dynamics on international economic relations, focusing on three key dimensions: bilateral trade, official development assistance (ODA), and foreign direct investment (FDI), particularly within the framework of China’s Belt and Road Initiative (BRI). In a global context marked by increasing rivalries among major powers, the primary objective of this research is to understand how geopolitical distance influences economic flows, aid allocation, and investment decisions. By incorporating geopolitical factors into traditional economic models, this thesis offers a more comprehensive approach to analyzing international economic relations.
The first section of the study investigates the influence of geopolitical distance on bilateral trade. Traditional gravity models explain trade flows based on physical distance and the size of economies. However, this research expands the model by integrating geopolitical distance measures, which are derived from UN voting alignment and other political affinity indicators. The results show that geopolitical proximity significantly enhances trade flows, particularly in strategic sectors such as energy and natural resources, whereas significant geopolitical tensions reduce trade. Thus, geopolitical distance, in addition to physical distance, emerges as a critical determinant in shaping trade decisions between nations.
The second section of the thesis examines how geopolitical considerations shape the allocation of ODA by member countries of the OECD Development Assistance Committee (DAC). Although development aid is primarily intended to support countries in need, it also serves as a tool for projecting the geopolitical influence of donor countries. Empirical analysis reveals that countries with closer geopolitical alignment to donors receive higher volumes of aid. This finding highlights that ODA is not solely driven by humanitarian goals but also functions as a strategic instrument for building and strengthening international alliances. Non-governmental channels, such as NGOs, play a crucial role in this dynamic, enabling a more targeted distribution of aid.
The third section of this thesis examines how China’s foreign direct investments (FDI) are influenced by geopolitical distance. Analyzing data from 132 countries between 1990 and 2021, this study reveals that China favors investment in countries with which it shares geopolitical proximity, particularly for large-scale investments in strategic sectors like infrastructure and natural resources. Conversely, for smaller investments, China shows greater flexibility, diversifying its engagements in politically distant regions, especially in Africa and Latin America. Through an econometric approach combining fixed-effects and quantile regressions, the results reveal China’s evolving strategy, notably under the influence of the Belt and Road Initiative, which aims to strengthen its influence in the Global South. This section thus demonstrates how Chinese FDI serves not only to boost economic development but also to extend China’s geopolitical influence on a global scale.