Assessing the Value of Market Access from Belt and Road Projects

Tristan Reed and Alexandr Trubetskoy

No 8815, Policy Research Working Paper Series from The World Bank

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.

Keywords: International Trade and Trade Rules; Transport Services; Ports&Waterways; Trade and Services (search for similar items in EconPapers)
Date: 2019-04-11
New Economics Papers: this item is included in nep-int, nep-ppm and nep-ure
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Citations: View citations in EconPapers (17)

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