IDEAS home Printed from https://ideas.repec.org/a/spr/josatr/v9y2024i1d10.1186_s41072-024-00167-y.html
   My bibliography  Save this article

The impact of the belt and road initiative on the Suez Canal cargo trade

Author

Listed:
  • Anas Rakha

    (Cairo University)

  • Khadiga El‑Aasar

    (Cairo University)

Abstract

The Suez Canal (SC) serves as the shortest maritime transport route from east to west. In the absence of the SC, global trade and transportation costs would increase substantially, impeding the expansion potential of the global economy. The Belt and Road Initiative (BRI) is a key component of China's future international trading network, with significant implications for global seaborne trade. The BRI's two primary pillars are the Maritime Silk Road (MSR) and the Silk Road Economic Belt, both of which have significant infrastructural investments. The MSR connects China to various regions in Asia, Africa, and Europe via the SC, thereby serving as a significant maritime trade route on a global scale, particularly between Europe and China. This is due to the SC's distinctive positioning on the MSR. Consequently, studying the significance of BRI for the SC cargo trade is crucial. This study uses annual data from 1990 to 2022 to examine this dynamic relationship. To account for the interaction effect of the variables, we use the vector autoregressive model and the impulse response function. Model results show that China's seaborne trade will increase SC trade by 23%, and China's BRI investment projects are anticipated to have a 5% significant impact on SC cargo trade and will continue to grow in the medium and long run. According to these findings, the SC has to continue to adopt more flexible pricing and marketing strategies to encourage and attract more customers. As a result, the SC could become a global logistics center and transform from a trade gateway to a global hub if it develops more value-added activities in its adjacent areas and attracts substantial Chinese investments.

Suggested Citation

  • Anas Rakha & Khadiga El‑Aasar, 2024. "The impact of the belt and road initiative on the Suez Canal cargo trade," Journal of Shipping and Trade, Springer, vol. 9(1), pages 1-19, December.
    • Handle: RePEc:spr:josatr:v:9:y:2024:i:1:d:10.1186_s41072-024-00167-y
    DOI: 10.1186/s41072-024-00167-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1186/s41072-024-00167-y
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1186/s41072-024-00167-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Feyrer, James, 2021. "Distance, trade, and income — The 1967 to 1975 closing of the Suez canal as a natural experiment," Journal of Development Economics, Elsevier, vol. 153(C).
    2. de Soyres, François & Mulabdic, Alen & Murray, Siobhan & Rocha, Nadia & Ruta, Michele, 2019. "How much will the Belt and Road Initiative reduce trade costs?," International Economics, Elsevier, vol. 159(C), pages 151-164.
    3. Anas Rakha & Khadiga El-Aasar, 2024. "Economic impacts of the maritime silk road initiative on the Suez Canal," Journal of Applied Economics, Taylor & Francis Journals, vol. 27(1), pages 2308949-230, December.
    4. Jan Hoffmann & Naima Saeed & Sigbjørn Sødal, 2020. "Liner shipping bilateral connectivity and its impact on South Africa’s bilateral trade flows," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 22(3), pages 473-499, September.
    5. Lu, Shuai & Chen, Ning & Zhou, Wei & Li, Shouwei, 2024. "Impact of the belt and road initiative on trade status and FDI attraction: A local and global network perspective," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 1468-1495.
    6. WANGPING Yang & XIAOLU Lu, 2018. "Study On The Interaction Between China And Japan’S Economy Based On Fdi, Import And Export Trade," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 13(1), pages 194-208, December.
    7. Du, Julan & Zhang, Yifei, 2018. "Does One Belt One Road initiative promote Chinese overseas direct investment?," China Economic Review, Elsevier, vol. 47(C), pages 189-205.
    8. Paul Tae-Woo Lee & Zhi-Hua Hu & Sang-Jeong Lee & Kyoung-Suk Choi & Sung-Ho Shin, 2018. "Research trends and agenda on the Belt and Road (B&R) initiative with a focus on maritime transport," Maritime Policy & Management, Taylor & Francis Journals, vol. 45(3), pages 282-300, April.
    9. Lee, Paul Tae-Woo & Hu, Zhi-Hua & Lee, Sangjeong & Feng, Xuehao & Notteboom, Theo, 2022. "Strategic locations for logistics distribution centers along the Belt and Road: Explorative analysis and research agenda," Transport Policy, Elsevier, vol. 116(C), pages 24-47.
    10. Jian Zhang & Meixia Ren & Xin Lu & Yu Li & Jianjun Cao, 2022. "Effect of the Belt and Road Initiatives on Trade and Its Related LUCC and Ecosystem Services of Central Asian Nations," Land, MDPI, vol. 11(6), pages 1-18, June.
    11. Tianhang Gao & Jing Lu, 2019. "The impacts of strait and canal blockages on the transportation costs of the Chinese fleet in the shipping network," Maritime Policy & Management, Taylor & Francis Journals, vol. 46(6), pages 669-686, August.
    12. Naima Saeed & Kevin Cullinane & Victor Gekara & Prem Chhetri, 2021. "Reconfiguring maritime networks due to the Belt and Road Initiative: impact on bilateral trade flows," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 23(3), pages 381-400, September.
    13. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-1072, June.
    14. Shengda Zhu & Xiaowen Fu & Adolf K.Y. Ng & Meifeng Luo & Ying-En Ge, 2018. "The environmental costs and economic implications of container shipping on the Northern Sea Route," Maritime Policy & Management, Taylor & Francis Journals, vol. 45(4), pages 456-477, May.
    15. Baniya, Suprabha & Rocha, Nadia & Ruta, Michele, 2020. "Trade effects of the New Silk Road: A gravity analysis," Journal of Development Economics, Elsevier, vol. 146(C).
    16. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
    17. Saeed, Naima & Nguyen, Su & Cullinane, Kevin & Gekara, Victor & Chhetri, Prem, 2023. "Forecasting container freight rates using the Prophet forecasting method," Transport Policy, Elsevier, vol. 133(C), pages 86-107.
    18. Chen, Kang & Xu, Shihe & Haralambides, Hercules, 2020. "Determining hub port locations and feeder network designs: The case of China-West Africa trade," Transport Policy, Elsevier, vol. 86(C), pages 9-22.
    19. Mohamed M. Mostafa, 2004. "Forecasting the Suez Canal traffic: a neural network analysis," Maritime Policy & Management, Taylor & Francis Journals, vol. 31(2), pages 139-156, April.
    20. Nugent, Jeffrey B. & Lu, Jiaxuan, 2021. "China's outward foreign direct investment in the Belt and Road Initiative: What are the motives for Chinese firms to invest?," China Economic Review, Elsevier, vol. 68(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Liu, Ziwei & Ding, Yibing, 2024. "Enhancing China's image in Africa: The role of the Belt and Road Initiative," China Economic Review, Elsevier, vol. 87(C).
    2. Damoah, Kaku Attah & Giovannetti, Giorgia & Marvasi, Enrico, 2022. "Do country centrality and similarity to China matter in the allocation of belt and road projects?," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 660-674.
    3. Naima Saeed & Kevin Cullinane & Victor Gekara & Prem Chhetri, 2021. "Reconfiguring maritime networks due to the Belt and Road Initiative: impact on bilateral trade flows," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 23(3), pages 381-400, September.
    4. Linda Calabrese & Rhys Jenkins & Lorena Lombardozzi, 2024. "The Belt and Road Initiative and Dynamics of Structural Transformation," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 36(3), pages 515-547, June.
    5. Achilleas Tsantis & John Mangan & Agustina Calatayud & Roberto Palacin, 2023. "Container shipping: a systematic literature review of themes and factors that influence the establishment of direct connections between countries," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 25(4), pages 667-697, December.
    6. Nugent, Jeffrey B. & Lu, Jiaxuan, 2021. "China's outward foreign direct investment in the Belt and Road Initiative: What are the motives for Chinese firms to invest?," China Economic Review, Elsevier, vol. 68(C).
    7. Feng, Yusen & Wang, Gang-Jin & Zhu, You & Xie, Chi, 2023. "Systemic risk spillovers and the determinants in the stock markets of the Belt and Road countries," Emerging Markets Review, Elsevier, vol. 55(C).
    8. Jiang, Qichuan & Ma, Xuejiao & Wang, Yun, 2021. "How does the one belt one road initiative affect the green economic growth?," Energy Economics, Elsevier, vol. 101(C).
    9. Jackson, Karen & Shepotylo, Oleksandr, 2021. "Belt and road: The China dream?," China Economic Review, Elsevier, vol. 67(C).
    10. Haoyuan Ding & Yi Li & Liang Wang & Chang Xue, 2022. "The Belt and Road Initiative, political involvement, and China's OFDI," International Studies of Economics, John Wiley & Sons, vol. 17(4), pages 459-483, December.
    11. Wang, Banban & Lin, Ping, 2022. "Whether China's overseas energy infrastructure projects dirtier or cleaner after the belt and road initiative?," Energy Policy, Elsevier, vol. 166(C).
    12. Yue Lu & Mengyuan Wang & Junjie Hong & Songbo Wu, 2024. "How does the belt and road initiative promote China's import?," Review of International Economics, Wiley Blackwell, vol. 32(2), pages 394-445, May.
    13. M. T. Alguacil & V. Orts, 2003. "Inward Foreign Direct Investment and Imports in Spain," International Economic Journal, Taylor & Francis Journals, vol. 17(3), pages 19-38.
    14. de Soyres, François & Mulabdic, Alen & Ruta, Michele, 2020. "Common transport infrastructure: A quantitative model and estimates from the Belt and Road Initiative," Journal of Development Economics, Elsevier, vol. 143(C).
    15. Morgenroth, Edgar & FitzGerald, John & FitzGerald, John, 2006. "Summary and Conclusions," Book Chapters, in: Morgenroth, Edgar (ed.),Ex-Ante Evaluation of the Investment Priorities for the National Development Plan 2007-2013, chapter 24, pages 317-333, Economic and Social Research Institute (ESRI).
      • Baker, Terence J. & FitzGerald, John & Honohan, Patrick & FitzGerald, John & Honohan, Patrick, 1996. "Summary and Conclusions," Book Chapters, in: Baker, Terence J. (ed.),Economic Implications for Ireland of EMU, chapter 12, pages 339-352, Economic and Social Research Institute (ESRI).
    16. M. Hakan Berument & Zulal Denaux & Yeliz Yalcin, 2012. "Turkish monetary policy and components of aggregate demand: a VAR analysis with sign restrictions model," Applied Economics, Taylor & Francis Journals, vol. 44(36), pages 4787-4798, December.
    17. Yuksel ILTAS & Umit BULUT, 2016. "The relationships among the returns of investment instruments: a vector autoregressive approach for Turkey," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(609), W), pages 273-280, Winter.
    18. Johannes W. Fedderke, 2022. "Identifying steady‐state growth and inflation in the South African economy, 1960–2020," South African Journal of Economics, Economic Society of South Africa, vol. 90(3), pages 279-300, September.
    19. Xu, T.T., 2012. "The role of credit in international business cycles," Cambridge Working Papers in Economics 1202, Faculty of Economics, University of Cambridge.
    20. J. Mark MUNOZ & Al NAQVI, 2017. "Artificial Intelligence and Urbanization: The Rise of the Elysium City," Journal of Economics and Political Economy, KSP Journals, vol. 4(1), pages 1-13, March.

    More about this item

    Keywords

    Suez Canal; Belt and road initiative; China’s seaborne trade; China's BRI investment projects; Maritime silk road; VAR model; Impulse response function;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:josatr:v:9:y:2024:i:1:d:10.1186_s41072-024-00167-y. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.