The impact of the New Silk Roads on economic governance in the Middle East and North Africa region

Abstract

The strength of China's economy has historically been linked to its openness and connections with the rest of the world. For fifteen centuries, the ancient Silk Road provided a network of roads and sea lanes for the trade of goods and the transfer of knowledge in Europe, the Middle East and Africa. The Silk Road Initiative is an attempt to reconstruct a modern Silk Road in order to, among other reasons, reduce the transportation costs of traded goods. The objective of this paper is to provide an overview of China's international trade with the Middle East and North Africa region and to study the sensitivity of bilateral trade flows between countries along the Belt and Road to distance, economic and demographic masses, and other variables of cultural and political proximity in order to investigate the impact of the new Silk Roads. To do so, we use a gravity model to analyze China's trade flows in relation to countries in the Middle East and North Africa region to those predicted by the model. However, we adopted the panel regression method to analyze the relationship that may exist between economic governance and the New Silk Roads. As a result, we found that the New Silk Roads have only a small effect on country governance.

JEL Classification: F14

Paper type: Empirical research