Abstract
This chapter investigates the evolution of market integration among the countries that expressed their interest in the Belt and Road Initiative (BRI). A price convergence within the BRI is tested using individual goods retail price data for a panel of countries covered by the initiative. The tests provide no evidence of the price convergence for the majority of goods between 1990 and 2010. At the same time, China became relatively more integrated with the BRI partners over time, mainly due to the price convergence with Asian economies. The analysis reveals that a large share of price differences between China and its partners can be explained by high trade costs, which underlines the importance of the BRI for enhancing trade integration and price convergence.
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