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Article

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

1
Laboratory on Globalisation, Innovation and Local Development, Dipartimento di Ingegneria Industriale e dell’Informazione e di Economia (DIIIE), University of L’Aquila, 67100 L’Aquila, Italy
2
United Nations University Institute on Comparative Regional Integration Studies (UNU-CRIS), Potterierei 72, 8000 Brugge, Belgium
3
Independent Researcher, 67100 L’Aquila, Italy
*
Author to whom correspondence should be addressed.
Academic Editor: Maria Cipollina
J. Risk Financial Manag. 2021, 14(2), 52; https://doi.org/10.3390/jrfm14020052
Received: 23 November 2020 / Revised: 17 January 2021 / Accepted: 22 January 2021 / Published: 26 January 2021
(This article belongs to the Collection International Trade Theory and Policy)
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. View Full-Text
Keywords: gravity model; geography of trade; Belt and Road Initiative; infrastructure gravity model; geography of trade; Belt and Road Initiative; infrastructure
MDPI and ACS Style

Di Stefano, C.; Iapadre, P.L.; Salvati, I. Trade and Infrastructure in the Belt and Road Initiative: A Gravity Analysis Based on Revealed Trade Preferences. J. Risk Financial Manag. 2021, 14, 52. https://doi.org/10.3390/jrfm14020052

AMA Style

Di Stefano C, Iapadre PL, Salvati I. Trade and Infrastructure in the Belt and Road Initiative: A Gravity Analysis Based on Revealed Trade Preferences. Journal of Risk and Financial Management. 2021; 14(2):52. https://doi.org/10.3390/jrfm14020052

Chicago/Turabian Style

Di Stefano, Cristina, P. L. Iapadre, and Ilaria Salvati. 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, no. 2: 52. https://doi.org/10.3390/jrfm14020052

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