How Much Will the Belt and Road Initiative Reduce Trade Costs?
This paper studies the impact of transport infrastructure projects of the Belt and Road Initiative on shipment times and trade costs. Based on a new data on completed and planned Belt and Road transport projects, Geographic Information System analy...
| Main Authors: | , , , , |
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| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/592771539630482582/How-Much-Will-the-Belt-and-Road-Initiative-Reduce-Trade-Costs http://hdl.handle.net/10986/30582 |
| Summary: | This paper studies the impact of
transport infrastructure projects of the Belt and Road
Initiative on shipment times and trade costs. Based on a new
data on completed and planned Belt and Road transport
projects, Geographic Information System analysis is used to
estimate shipment times before and after the Belt and Road
Initiative. Two sets of data are computed to address
different research questions: a global database based on an
analysis of 1,000 cities in 191 countries and 47 sectors and
a regional database that focuses on more granular
information (1,818 cities) for Belt and Road economies only.
The paper uses sectoral estimates of “value of time” to
transform changes in shipment times into changes in ad
valorem trade costs at the country-sector level. The
findings show that the Belt and Road Initiative will
significantly reduce shipment times and trade costs. For the
world, the average reduction in shipment time will range
between 1.2 and 2.5 percent, leading to reduction of
aggregate trade costs between 1.1 and 2.2 percent. For Belt
and Road economies, the change in shipment times and trade
costs will range between 1.7 and 3.2 percent and 1.5 and 2.8
percent, respectively. Belt and Road economies located along
the corridors where projects are built experience the
largest gains. Shipment times along these corridors decline
by up to 11.9 percent and trade costs by up to 10.2 percent.
The paper also shows that these effects are magnified by
policy reforms that reduce border delays and improve
corridor management. |
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