China Economist Vol.16, No.4, July-August 2021

Abstract: Supply and demand of public goods provide a brand-new theoretical framework for research on the creation of inclusive global value chains (GVCs) under the Belt and Road Initiative (BRI). The supply of international public goods is an important positive variable for creating global value chains under the BRI, in which China and other developing countries involved, as well as their small and medium-sized enterprises (SMEs), are microscopic entities. When the BRI’s supply of instrumental, institutional, and conceptual international public goods is in equilibrium with the demand of GVC entities for public goods, the BRI creates necessary conditions for the extension of GVCs. GVCs created under the BRI are of great value in promoting inclusiveness, fair income distribution, balanced regional development, and the restructuring of international economic governance. Under the current GVC system, some developed countries have been wary about the BRI and even developed misgivings and biases. Nevertheless, developed countries may play an active role in bridging gaps in the BRI’s development and complement their respective strengths with developing countries for win-win cooperation.

Keywords: BRI; inclusive global value chains; supply and demand of public goods; developing countries; SMEs

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