The Direct and Indirect Effects of the Belt and Road Initiative on Exports to China

This study investigates the direct effect of a country's participation in China’s Belt and Road Initiative (BRI) on its exports to China, as well as its indirect effect on other countries' exports to China. Using an event study approach, staggered difference-in-differences methodology, and spatial econometric models, we find that participation in the BRI significantly increases member countries’ exports to China, partly because of improvements in infrastructure. We also find evidence showing that countries without strong pre-existing political ties with China are more likely to experience greater export gains after joining the BRI. Furthermore, employing the Spatial Durbin Model, we find that the BRI has a significantly negative indirect effect on exports of countries with a manufacturing share similar to those of BRI members. This result likely reflects heightened competitive pressures, as the BRI increases exports to China from members. However, when using a spatial weight matrix constructed based on geographic distance, we find no significant indirect effect, suggesting that the positive effect of the BRI does not spill over to geographic neighbor countries through infrastructure development.