Trade and infrastructure in the Belt and Road Initiative: A Gravity Analysis Based on Revealed Trade Preferences

Di Stefano, Cristina, Lapadre, Lelio and Salvati, Ilaria, (2021). Trade and infrastructure in the Belt and Road Initiative: A Gravity Analysis Based on Revealed Trade Preferences. Journal of Risk and Financial Management, 14(2), n/a-n/a

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  • Sub-type Journal article
    Author Di Stefano, Cristina
    Lapadre, Lelio
    Salvati, Ilaria
    Title Trade and infrastructure in the Belt and Road Initiative: A Gravity Analysis Based on Revealed Trade Preferences
    Appearing in Journal of Risk and Financial Management
    Volume 14
    Issue No. 2
    Publication Date 2021
    Place of Publication Basel, Switzerland
    Publisher Multidisciplinary Digital Publishing Institute
    Start page n/a
    End page n/a
    Language eng
    Abstract This paper aims at investigating whether and how the intensity of trade between a pair of countries changes when they experience improvements in their infrastructural systems. We carry out our analysis considering countries participating in the Belt and Road Initiative (BRI), a project specifically designed to promote infrastructural connectivity and therefore boost trade among the countries involved. Our empirical strategy relies on a particular specification of the gravity model, in which the dependent variable consists in an index of revealed trade preferences, calculated by comparing the actual value of trade flows between two countries with their expected value, proportional to the two countries’ total trade. Such methodology allows us to estimate bilateral trade intensity without resorting to the traditional “size” variables of the gravity model, taking the entire network of multilateral trade into account. We then study the possible impact of an improvement in infrastructure on a ‘gravity-adjusted’ measure of trade preferences, given by the residuals of our first estimations. Our results indicate that bilateral preferences among BRI countries will intensify inasmuch as they succeed in coordinating their infrastructural projects.
    Keyword Gravity model
    geography of trade
    Belt and Road initiative
    Infrastructure
    Copyright Holder The Author(s)
    Copyright Year 2021
    Copyright type Creative commons
    DOI 10.3390/jrfm14020052
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    Created: Thu, 02 May 2024, 23:42:02 JST by Masovic, Ajsela on behalf of UNU CRIS