Impact of Financial Development, Institutional Quality and Earning Population on Sustainable Development of BRI Economies

AbstractThe main aim of this research was to explore the influence of financial development (FD), institutional quality (IQ), and the size of the earning population (EP) on sustainable development (SD) in 64 countries participating in the One Belt and One Road initiative (BRI) from 2005 to 2020. Employing a two-step generalized method of moments (GMM) analysis, the study revealed a consistent and favorable trajectory in the sustainable development of these nations, in line with established economic theories. The study revealed that financial development and institutional quality (measured by IQ-WDI and ICRG) had significant positive effects on sustainable development. However, earning population (EP) exhibited a negative yet significant influence on sustainable development. Additionally, control variables such as inflation, exchange rate, and unemployment rate negatively impacted SD, whereas current account balance (CAB) had a positive effect. The study also discussed policy implications and future directions, emphasizing the integration of One Belt and One Road countries as a pathway to successful sustainable development. These findings hold crucial implications for policymakers aiming for balanced and sustainable growth strategies.