Analysis Of Effects Of Participation In The Belt And Road Initiative For African Countries Using Gravity Model

The Belt and Road Initiative(BRI)has become a critical part of China’s foreign policy,aiming to increase global connectivity and facilitate trade.African countries have become a significant participant in the BRI,receiving significant investment from China for various infrastructure projects.This thesis analyzes the trade patterns between China and African countries using the Gravity Model of International Trade and the Difference-in-Differences(DID)framework.The Gravity model is employed to estimate the determinants of bilateral trade between China and African countries,including economic,geographic,and institutional factors that affect the trade flows.The DID framework is used to examine the impact of BRI participation on bilateral trade flows between China and African countries.The study finds that BRI participation positively influences trade flows between China and African countries,with the DID results showing that BRI participating countries experience a trade increase of over 13% compared to non-participants.This paper explores the trading and economical relations between China and multiple countries of the African continent,looking at the projects under the Belt and Road Initiative as a frontier of Sino-African relations of the last decade and analyzes the effects and potential of this cooperation.This paper selects China’s and its trading partner’s GDP,geographical distance,bilateral trade values and population as explanatory variables to use in the Gravity Model of International Trade to do multiple measurements on import and export values between China and African countries and a DID framework to observe the positive effect of them joining the BRI in contrast to the countries that chose to not do so.Multiple studies were conducted on the topic of economical relationships between these two regions and the initiative itself,however this research is focused on connecting these two topics to get a clearer vision of the current state of affairs as well as the multiple future possibilities,including business opportunities for China,its government and private investors.This research uses second-hand panel data collected from open sources like UNSD,IMF and WTO,and all the descriptive statistics,regressions and checks were done using STATA 14 software.