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Integrating infrastructure and facilitating movement of people, goods and services
The purpose of this study is to evaluate the effect of People’s Republic of China’s Belt and Road initiative strategy on trade and welfare in Eastern Africa.
In 2013, Chinese President Xi Jinping announced a proposal for a “Silk Road Economic Belt” and a “21st Century Maritime Silk Road”, formally known as Belt and Road Initiative (BRI). The BRI routes will run through countries in Asia, Europe, and Africa. In East Africa, the countries along the BRI include Djibouti, Ethiopia, Kenya, Rwanda, Uganda and Tanzania. One of the BRI projects in East Africa, the standard gauge railway is already under construction. It will connect the ports of Mombasa and Dar- es-salaam to Kenya, Uganda, Tanzania and Rwanda. The standard gauge railway is expected to reduce transport costs in the region, which has implications for trade and welfare.
This study uses the Global Trade Analysis Project (GTAP) computable general equilibrium (CGE) model and the latest GTAP 10 database to analyse the effects of the establishment of the BRI. We conduct policy simulations to evaluate the potential impact of the BRI on trade and welfare in Eastern Africa. Under modest assumptions, the total exports of countries could increase by $192 million and welfare by about $1 billion. The BRI would result in a particularly pronounced increase in intra-regional trade.