The impact of China’s One Belt One Road initiative on international trade in the ASEAN region

Abstract

This study explores the potential effects of China’s ‘One Belt One Road’ (OBOR) policy on trade flows in ASEAN countries and China. We use the augmented gravity model of international trade and data on ASEAN countries and China from 2000 to 2016. The empirical results show that the coefficient of the OBOR dummy is positive and statistically significant, which implies that this policy benefits both ASEAN countries and China in terms of increased trade flows among these countries. In addition, the coefficients of other control variables, such as a common language, a common border, and distance, have the expected signs, and all are statistically significant. Thus, the OBOR policy initiative could be a promising mechanism for trade facilitation in these countries in the years to come.