The trade and welfare effects of the belt and road initiative

Abstract This paper evaluates the general equilibrium trade and welfare effects of the Belt and Road Initiative (BRI). We estimate the partial trade effect of the BRI using the synthetic control method. By feeding the implied trade cost reduction into counterfactual equations, we simulate the general equilibrium trade and welfare effects of the BRI based on the structural gravity model. We find that the BRI has greatly increased China's and BRI members' trade and welfare, with little impact on non‐BRI members.