Governance impact on cooperation preference - a case of BRI oil & gas countries

Abstract This study explores countries that have engaged in oil and gas business with China over the past two decades. The launch of Belt and Road Initiative (BRI) in 2013 indicates China’s intent to enhance existing collaborative ties and strengthen partnerships with these countries. From a non-resource endowment perspective, this research investigates which governance traits would impact a country’s likelihood of signing BRI- indicating the country’s willingness to strengthen bilateral ties with China as well. The study employ the discrete choice model to measure such influence, in which the Worldwide Governance Indicators serve as core explanatory variable of a country’s governance mode, with both country and year fixed effects included. Considering gas is widely viewed as a cleaner fossil fuel with lower carbon intensity than oil, the study further conduct a heterogeneity analysis by categorizing these countries into “pure-oil” and “gas-related” subgroups. Empirical results reveal that a stronger rule of law and weaker voice and accountability are key governance traits associated with a higher likelihood of signing a BRI agreement with China. This pattern is especially evident in countries with a rule of law level no higher than China’s, and among those engaged primarily in pure oil business. It can be argued that there exists a structural alignment between a country’s de facto governance quality and its BRI signing behavior. A similar preference for a stronger government role may help mitigate institutional friction and transaction costs in the oil and gas sector—a typically government-dominated sector—thereby significantly increasing the probability of signing. This study offers new empirical evidence and policy insights into the political logic underlying global oil and gas cooperation under China’s Belt and Road Initiative.