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Common transport infrastructure: A quantitative model and estimates from the Belt and Road Initiative

François de Soyres, Alen Mulabdic () and Michele Ruta ()

Journal of Development Economics, 2020, vol. 143, issue C

Abstract: This paper presents a structural general equilibrium model to analyze the effects on trade, welfare, and gross domestic product of common transport infrastructure. The model builds on Caliendo and Parro (2015) to allow for changes in trade costs due to improvements in transportation infrastructure, financed through domestic taxation, connecting multiple countries. The model highlights the trade impact of infrastructure investments through cross-border input-output linkages. This framework is then used to quantify the impact of the Belt and Road Initiative. Using new estimates on the effects on trade costs of transport infrastructure related to the initiative, the model shows that gross domestic product will increase by up to 3.4 percent for participating countries and by up to 2.9 percent for the world. Because trade gains are not commensurate with projected investments, some countries may experience a negative welfare effect due to the high cost of the infrastructure.

Keywords: Transportation infrastructure; Trade; Structural general equilibrium; Belt and road (search for similar items in EconPapers)
JEL-codes: F10 F11 F14 (search for similar items in EconPapers)
Date: 2020
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Related works:
Working Paper: Common Transport Infrastructure: A Quantitative Model and Estimates from the Belt and Road Initiative (2020) Downloads
Working Paper: Common Transport Infrastructure: A Quantitative Model and Estimates from the Belt and Road Initiative (2019) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:143:y:2020:i:c:s0304387819307345

DOI: 10.1016/j.jdeveco.2019.102415

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