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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Article
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Sub-type Journal article Author Di Stefano, Cristina
Lapadre, Lelio
Salvati, IlariaTitle 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
InfrastructureCopyright Holder The Author(s) Copyright Year 2021 Copyright type Creative commons DOI 10.3390/jrfm14020052 -
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