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Assessing the Value of Market Access from Belt and Road Projects

Author

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  • Reed,Tristan
  • Trubetskoy,Alexandr

Abstract

This paper describes a parsimonious approach to the economic analysis of transportation investments. In a gravity model of trade, project benefits may be summarized by a money metric for the change in market access experienced by all cities due to the investment. This metric is equivalent to the change in the value of all payments to urban land?the fixed factor of production. Using this model and an original geographic information system data set of Belt and Road Initiative projects in Eurasia, the paper predicts additional income paid to owners of urban land, for each project and city. Individually, nearly half of the proposed infrastructure is estimated to provide significant gains; however, the rest is estimated to be of little value because it fails to create new least-cost paths between large populations centers. Considering the proposed new transport infrastructure as a system, the share of projects that provide gains increases to almost two-thirds. While gains in market access accrue primarily to low-income countries, gains from many projects accrue outside the project country, and in dollar terms more so to richer countries. This finding is consistent with the idea that infrastructure investment along international trade corridors can be a public good. These estimates should be taken as lower bounds, because they do not include direct benefits to users, for instance, time savings. Even so, they offer a useful way for governments to estimate the short-run gains from infrastructure and prioritize infrastructure spending.

Suggested Citation

  • Reed,Tristan & Trubetskoy,Alexandr, 2019. "Assessing the Value of Market Access from Belt and Road Projects," Policy Research Working Paper Series 8815, The World Bank.
  • Handle: RePEc:wbk:wbrwps:8815
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    Citations

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    Cited by:

    1. Ahmad, Zofia & Chicoine, Luke, 2021. "Silk Roads to Riches: Persistence Along an Ancient Trade Network," MPRA Paper 105146, University Library of Munich, Germany.
    2. Leone, Fabrizio & Macchiavello, Rocco & Reed, Tristan, 2022. "Market size, markups and international price dispersion in the cement industry," LSE Research Online Documents on Economics 117954, London School of Economics and Political Science, LSE Library.
    3. Zajac, Kimsey & Kaplan, Lennart, 2021. "Why Germany should continue its development cooperation with China," Kiel Policy Brief 159, Kiel Institute for the World Economy (IfW Kiel).
    4. World Bank, 2020. "South Caucasus and Central Asia - The Belt and Road Initiative," World Bank Publications - Reports 34121, The World Bank Group.
    5. World Bank, 2020. "South Caucasus and Central Asia - The Belt and Road Initiative," World Bank Publications - Reports 34119, The World Bank Group.
    6. Macchiavello, Rocco & Leone, Fabrizio & Reed, Tristan, 2021. "The Falling Price of Cement in Africa," CEPR Discussion Papers 16253, C.E.P.R. Discussion Papers.
    7. 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.
    8. World Bank, 2020. "South Caucasus and Central Asia - The Belt and Road Initiative," World Bank Publications - Reports 34120, The World Bank Group.
    9. 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.
    10. Britta Kuhn, 2021. "Chinas Belt and Road Initiative wandelt sich [China’s Belt and Road Initiative Is Changing]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 101(11), pages 901-905, November.
    11. World Bank, 2020. "South Caucasus and Central Asia - The Belt and Road Initiative," World Bank Publications - Reports 34118, The World Bank Group.
    12. World Bank, 2020. "South Caucasus and Central Asia - The Belt and Road Initiative," World Bank Publications - Reports 34122, The World Bank Group.
    13. Bird, Julia & Lebrand, Mathilde & Venables, Anthony J., 2020. "The Belt and Road Initiative: Reshaping economic geography in Central Asia?," Journal of Development Economics, Elsevier, vol. 144(C).
    14. 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).
    15. Lall, Somik V. & Lebrand, Mathilde, 2020. "Who wins, who loses? Understanding the spatially differentiated effects of the belt and road initiative," Journal of Development Economics, Elsevier, vol. 146(C).

    More about this item

    Keywords

    International Trade and Trade Rules; Transport Services; Ports&Waterways; Trade and Services;
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