The Belt and Road Initiative and Cultural Bias in Bilateral Trade with China

Abstract

The Belt and Road Initiative (BRI) is a blanket term used to describe China’s ambitious plans to create an economic belt consisting of overland and maritime infrastructure projects. Despite being marketed as a win-win partnership, assured to pilot both economic and development opportunities, many scholars are skeptical, with concerns regarding the initiative’s real intentions and benefits. Applying a trade gravity model, augmented with a Culture Based Development (CBD) element, and combined with a difference in differences empirical approach, I evaluate the impact from an ongoing BRI project in Haifa, Israel. There were two main sources of data in my study: The World Bank and the French CEPII institute (Centre d’Etudes Prospectives et d’Informations Internationales), with special data on linguistic proximity. My findings suggest that investment into the maritime port in Haifa has no positive effect on bilateral trade between Israel and its international trade partners. Interestingly, however, I find effects of linguistic proximity persist after the new construction of the BRI infrastructure.

Keywords:

• bilateral trade
• Belt and Road Initiative (BRI)
• linguistic proximity
• culture

JEL Classification Codes:

• R11
• Z10

Notes

1 https://www.aiib.org/en/index.html

Additional information

Notes on contributors

Ryan Kapma

Ryan Kapma is a degree candidate in the School of Management at Swansea University.