Impacts of Cross-Country Infrastructure on Bilateral Trade: Evidence from New Silk Road Railways

Abstract

New Silk Road railways have provided cross-continental rail freight services between China and Eurasian countries since 2011. We examine the impact of being connected to Silk Road railways on the 13 destination countries bilateral trade with China. To address the issue of endogenous placement of railways, we utilize the generalized synthetic control method. We find that the railway connections do not have significant impacts on either gross import or gross export of destination countries. The results are robust to alternative methods, across product categories, and different grouping of destination countries based on whether they share boundary with China.