How Trade Wars Affect Exports of the Belt and Road Countries: New Evidence from Dynamic Panel Data Analysis

Abstract

Globalization of the world affects the interests of the people continuously in the tendency of being shaped by the integrations geographic factors. By being different from the previous ages, the flow of information allows us today the integration of perception for needs and demands in common sense as a result of global approach, which has been leading to increase in speed of movement of commodities among economies. This increase and practically optimized logistics frameworks drastically reduced the challenge of physical movement of assets among far regions in globe. In our days, a new concept called Belt and Road Initiative (BRI) is being discussed and searching for participant economies to enlarge the volume of trade among Far East and Western Europe. Whereas the process of seeking for participants for BRI, the Trade Wars have been continuing among world’s leading economies to sustain domination roles over world trade volume. Considering that the effects of the trade wars between China and the USA on the Belt and Road Initiative have not been examined broadly until today, it is thought that this paper will make important contributions to the literature. As a result of Arellano-Bond (1991) and Arellano-Bover(1995) GMM estimators, it is determined that tariff rates of China is statistically significant and negative on the export of BRI countries whereas tariff rates of the USA does not have a statistically significant effect on these countries. In Addition, Dumitrescu-Hurlin panel causality analyzes demonstrate that there are unidirectional causality relationships from tariff rates of China and USA to exports of the BRI countries. The empirical findings indicate that trade wars have a significant impact on exports of the BRI countries.

Keywords

• belt and road initiative
• dumitrescu-hurlin panel causality test
• dynamic panel data
• export
• trade wars