Study Of Transport Infrastructure’s Function On The Silk Road Economic BeltLandlocked Countries

One Belt One Road initiative covers a wide range of countries and industries. Although it has been the third year, most of the existing research papers still only focus on macro strategies. Rigorous quantitative analysis on countries and industries with similar features is an urgent. As the AIIB announces it first debt project, international and regional infrastructure construction has become a popular topic.Transport infrastructure is the foundation of economic development, as well as international trade. However, because of some mathematical difficulties, it has faded out of neo-classical economics framework. Luckily, current empirical studies have proved the important role of traffic infrastructure in the international economic activity. As the transport cost decrease, trade volume would increase, and gradually so will the GDP. In addition, the construction of transport infrastructure creates jobs and consumes excessive capacity. Therefore, in the post-crisis era, it could be an effective way for nations to recover from the mass economic recession.Transport Infrastructure is a typical public good with external effect. Also, it needs a large amount of initial investment which is beyond normal amount of private investment. Therefore, how to make reasonable financing project is an important issue of policymakers. Obviously, maintaining effective communication between nations and multinational financial institutions to prepare construction fund, and achieve road connectivity could be the first battle to implement the Silk Road Economic Belt strategy.Landlocked developing countries within the Eurasian continent along the Silk Road Economic Belt have many facts in common. They are far away from coastline, blocked from the main global markets and own old transport facilities without maintenance. Thus, they have limited domestic markets and the economic structure is undiversified. Compared to other countries, these countries’ demand for modern transportation infrastructure is more urgent. On the side of China, although we have signed several bilateral or multilateral trade agreements in order to facilitate trade amount, the effect is no evident. Apparently, the lack of modem transportation infrastructure has become the bottleneck for these landlocked countries to promote trade amount and achieve higher economic development. Therefore, research relating to the topic is of an urgent.This paper analyzes 10 landlocked developing countries in the Eurasian continent along the Silk Road Economic Belt, with the basic macroeconomic environment analysis and quantitative simulation by using GTAP model. The result is solid and reasonable. It shows that the improvement of transportation infrastructure in the region could have positive effects on the trade amount and economic development. Particularly, the analysis target countries benefit the most among and followed by China. This conclusion not only demonstrates the important role of transportation infrastructure in international trade and economic development, but also reflects the urgent demand for transport infrastructure of landlocked developing countries.