Oleksandr Shepotylo (Birmingham)

A lecture with Oleksandr Shepotylo (Birmingham) will take place in Regensburg on 4 June 2019. His paper is entitled "'Belt and Road:' The 'China Dream'?" and explores the impact of the Belt and Road Initiative (BRI). The event is part of the lecture series of the Economics Division of the Leibniz Institute for East and Southeast European Studies (Leibniz-Institut für Ost- und Südosteuropaforschung – IOS).

Shepotylo's paper explores the impact of the Belt and Road Initiative (BRI), in terms of changes to trade costs and investment, on trade and consumer welfare in China, the EU and the rest of the World. We look at how these welfare changes compare to the gains from signing shallow and deep FTAs with the EU, as well as analyzing the interplay of the BRI with mega trade deals (TTIP and TPP) and evaluating the dynamics of the welfare changes over time. We employ a structural gravity approach, where the production side is modeled using mobile capital flows in the form of physical capital and FDI. Our results indicate substantial gains from the BRI for China and the EU where a 30 percent reduction in transportation costs between China and the EU would increase the welfare of a representative consumer in China by 1.51 percent and the EU by 0.97 percent. On the other hand, we find that signing and implementing an FTA between China and the EU is equivalent to transport cost reductions of approximately 45 percent. Whereas, combining the BRI with a deep FTA would increase welfare by 4.90 and 2.94 percent, respectively. The potential negative effect of the TPP on China is more than compensated by the BRI initiative, and Chinese investment would further increase welfare of the countries participating in this project.

Oleksandr Shepotylo is researcher at the Aston University Birmingham.

Where: Regensburg – Leibniz-Institut für Ost-und Südosteuropaforschung (IOS), Landshuter Str. 4 (room 109)

When: 4 June 2019, starting at 1:30 p.m.