Impact of the "Belt and Road Initiative" on machinery production networks

Trade policies, in combination with rapid globalization, have the potential to stimulate or alter the specialized production undertakings in all countries that constitute an international production network. The literature shows that a change in the export of parts and components, and final products reflects the development of the machinery production network. Using export data at the disaggregated product level between China and 99 of its trading partners from 2010 to 2017, we examined the impact of the "Belt and Road Initiative" (BRI) on machinery production networks by employing a difference-in-differences method within the gravity framework. The empirical results demonstrated that the Chinese economy was deeply integrated into machinery production networks in BRI countries. The increase in the export of final products was twice that of the parts and components. Furthermore, we established that the export increases in BRI countries in Europe, Asia, and Africa were heterogeneous.