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Estimating China’s Trade with Its Partner Countries within the Belt and Road Initiative Using Neural Network Analysis

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  • Koffi Dumor

    () (School of Management and Economics, University of Electronic Science and Technology of China, No. 2006, Xiyuan Ave, West Hi-Tech Zone, Chengdu 611731, China
    Center for West African Studies, University of Electronic Science and Technology of China, No. 2006, Xiyuan Ave, West Hi-Tech Zone, Chengdu 611731, China)

  • Li Yao

    () (School of Management and Economics, University of Electronic Science and Technology of China, No. 2006, Xiyuan Ave, West Hi-Tech Zone, Chengdu 611731, China
    Center for West African Studies, University of Electronic Science and Technology of China, No. 2006, Xiyuan Ave, West Hi-Tech Zone, Chengdu 611731, China
    East Asian Institute, National University of Singapore, Singapore 259770, Singapore)

Abstract

The Belt and Road Initiative (BRI) under the auspices of the Chinese government was created as a regional integration and development model between China and her trade partners. Arguments have been raised as to whether this initiative will be beneficial to participating countries in the long run. We set to examine how to estimate this trade initiative by comparing the relative estimation powers of the traditional gravity model with the neural network analysis using detailed bilateral trade exports data from 1990 to 2017. The results show that neural networks are better than the gravity model approach in learning and clarifying international trade estimation. The neural networks with fixed country effects showed a more accurate estimation compared to a baseline model with country-year fixed effects, as in the OLS estimator and Poisson pseudo-maximum likelihood. On the other hand, the analysis indicated that more than 50% of the 6 participating East African countries in the BRI were able to attain their predicted targets. Kenya achieved an 80% (4 of 5) target. Drawing from the lessons of the BRI and the use of neural network model, it will serve as an important reference point by which other international trade interventions could be measured and compared.

Suggested Citation

  • Koffi Dumor & Li Yao, 2019. "Estimating China’s Trade with Its Partner Countries within the Belt and Road Initiative Using Neural Network Analysis," Sustainability, MDPI, Open Access Journal, vol. 11(5), pages 1-22, March.
  • Handle: RePEc:gam:jsusta:v:11:y:2019:i:5:p:1449-:d:212336
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    References listed on IDEAS

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    More about this item

    Keywords

    belt and road initiative; trade; gravity model; neural network analysis;

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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