One Belt, One Road, One Way?

Abstract

We analyze the trade effects of a new unfolding transport infrastructure in connection with China's Belt and Road Initiative (BRI). Using panel data for the years 1996-2018, featuring 27 exporting countries and 96 industries, we exploit variation in the timing and number of railway connections to estimate whether European countries benefit from increased export revenues and product variety of their shipments to China. We find that both increase and that also indirectly connected countries benefit. Using additional data on the mode of transport, we find that industries with intermediate time-sensitivity appear to increase their utilization of rail-freight to China the most and confirm that the overall increase in exports is driven by these industries.