Impact of Political, Social Safety, and Legal Risks and Host Country Attitude towards Foreigners on Project Performance of China Pakistan Economic Corridor (CPEC)

Abstract

The China Pakistan Economic Corridor (CPEC) project was signed between China and Pakistan in the year 2013. This mega project connects the two countries to enhance their economic ties and give them access to international markets. The initial investment for the project was $46 billion with a tentative duration of fifteen years. Being an extensive project in terms of cost and duration, many factors and risks affect its performance. This study aims to investigate the effects of political (PR), social safety (SR), and legal risks (LR) on the project performance (PP) of the CPEC. It further investigates the significance of the host country’s attitude towards foreigners (HCA). A research framework consisting of PR, SR, and LR as independent variables, PP as the dependent variable, and HCA as moderator is formulated and tested in the current study. In this quantitative study, the Likert scale is used to measure the impact of the assessed risks. A questionnaire survey is used as a data collection tool to collect data and test the research framework and associated hypotheses. The partial least square structural equation modeling (PLS-SEM) is used to perform the empirical test for validation of the study, with a dataset of 99 responses. The empirical investigation finds a negative relationship between PR, SR, LR, and PP. It is concluded that PR, SR, and LR negatively influence the PP of CPEC. Furthermore, HCA negatively moderates the PR, LR, and PP of CPEC. In contrast, the value of SR and PP is positive in the presence of the positive HCA.

Keywords

• China Pakistan Economic Corridor
• host country attitude towards foreigners
• legal risk
• political risk
• project performance
• social safety risk