Trade effects of the New Silk Road: A gravity analysis

By Suprabha Baniya, Nadia Patrizia Rocha Gaffurri, Michele Ruta. Journal of Development Economics, 2019

204 citations recorded by the source corpus.

This paper takes a first look at the trade effects of China's Belt and Road Initiative, also referred to as the New Silk Road, on the 71 countries potentially involved. The initiative consists of several infrastructure investment projects to improve the land and maritime transportation in the Belt and Road Initiative region. The analysis first uses geo-referenced data and geographical information system analysis to compute the bilateral time to trade before and after the Belt and Road Initiative. Then, it estimates the effect of improvement in bilateral time to trade on bilateral export values and trade patterns, using a gravity model and a comparative advantage model. Finally, the analysis combines the estimates from the regression analysis with the results of the geographical information system analysis to quantify the potential trade effects of the Belt and Road Initiative. The paper finds that (i) the Belt and Road Initiative increases trade flows among participating countries by up to 4.1 percent; (ii) these effects would be three times as large on average if trade reforms complemented the upgrading in transport infrastructure; and (iii) products that use time sensitive inputs and countries that are highly exposed to the new infrastructure and integrated in global value chains have larger trade gains.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/5e446390577be81c3698b51a122b1abfc261a30e

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Citations in the corpus

How Much Will the Belt and Road Initiative Reduce Trade Costs? (2018, background): “Those parts are themselves organized around six economic corridors: (1) the China‐Mongolia‐Russia Economic Corridor; (2) the New Eurasian Land Bridge; (3) the China–Central Asia–West Asia Economic Corridor; (4) the China–Indochina Peninsula Economic Corridor; (5) the China‐Pakistan Economic Corridor”