The impact of China's One-Belt One-Road initiative on international trade and global value chains

This study examines the potential effects of China's 'One-Belt One-Road' initiative (OBOR) on trade flows and global value chain (GVC) connections. The empirical analysis is based on the augmented trade gravity model, which comprises 186 economies and 199 of their partners from 2000 to 2018. We also estimate the gravity model for involvement in GVC (domestic value added in intermediate exports, foreign value added in exports, and one country's contributed value in another's total exports). OBOR proves to be positively correlated with international trade and GVC, while some corridors seem to benefit more than others (e.g. China-Pakistan, China-Mongolia-Russian Federation, and Bangladesh-China-India-Myanmar).