Country risk and international trade: evidence from the China-B&R countries

ABSTRACT

This study conducts a time-varying stochastic frontier gravity model to explore the interactions between country risk and foreign trade for the Belt and Road countries. By using the data of bilateral trades between 134 countries and China during 2003–2018, empirical results show that reduction of country risk will increase the bilateral trades between China and these countries. Based on these findings, the implementation of the Belt and Road initiative may effectively hedge the country risk of the trade partners and promotes their bilateral trades with China.

KEYWORDS:

• Country risk
• international trade
• B&R initiative
• time-varying stochastic frontier gravity model

JEL CLASSIFICATION:

• C33
• F42

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the National Natural Science Foundation of China [71603190,71673206].