The Belt and Road Initiative Impact on Europe: An Italian Perspective

Abstract

AbstractThis paper analyzes the impact of the Belt and Road Initiative on Europe with a specific focus on Italy. We concentrate on the impact of new railways and port infrastructures on bilateral trade. Our analysis suggests that the development of new railway connections will benefit most of the Northern and Central European countries. Some industries like automotive and electronics that have a higher value to weight ratio will benefit more than others. However, due to higher costs, railway services will never reach a high percentage of total import/export flows. Investment in new port facilities, although less “new” compared with railways, may be a bigger game changer. The development of the Port of Piraeus has already increased the importance of the Mediterranean Sea as an import/export hub for China. If the other planned investments in Egypt and Algeria are completed, this phenomenon will be magnified. This presents a huge challenge for Italy. The Italian port in the high Adriatic Sea could be displaced by Piraeus capacity, especially if this port is linked through railways with the center of Europe. Italy needs to coordinate its ports together with its railway network to take advantage of Belt and Road Initiative opportunities.