Author(s)

Taiba Sardar, Zeng Jianqiu, Zahid Hussain, Abdul Ahad Zulfiqar

Corresponding Author

Taiba Sardar

ABSTRACT

One belt and road (OBOR) is a revolutionary project that involves 65 countries in trade, investment, economic integration and development. This study examines OBOR trade flow in terms of trade potential and infrastructural effects at bilateral and country level. We used bilateral and country level data sets to construct soft infrastructure trade facilitation indicators by employing Factor Analysis (FA) with eight primary variables. We used Gravity Model (GM) to correct multilateral resistance terms. Our results show that communication and financial infrastructure have large impact on China’s trade with its OBOR trade partner countries. The trade partners of China must improve infrastructure to enhance their trade potential. Improvement in financial infrastructure is extremely significant for OBOR countries. Some trade barriers discourage trade potential through cost channel however, economic size (GDP) impact significantly on the trade.

KEYWORDS

Communication, Financial Infrastructure, Gravity Model (GM), Multilateral Resistance Terms (MRT), One Belt and Road (OBOR)