Trade Effects of the New Silk Road : A Gravity Analysis
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 i...
| Main Authors: | , , |
|---|---|
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/623141547127268639/Trade-Effects-of-the-New-Silk-Road-A-Gravity-Analysis http://hdl.handle.net/10986/31138 |
| Summary: | 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. |
|---|