The Impact of Civilization Clashes on the Bilateral Trade of Countries along the“Belt and Road”Route under the Institutional Boundary

Abstract

Abstract: By making use of the HS07 six digit statistical data of classified trade of 64 countries along the“Belt and Road”route from 2008 to 2014 and employing the high-dimensional fixed effects model of panel data, this paper empirically studies the impact of civilization clashes on the bilateral trade of countries along the “Belt and Road”route under the institutional boundary when the other affecting factors are effectively controlled. The findings indicate that the institutional quality of the import and export countries is an important boundary condition to the impact of the civilization clashes on the bilateral trade of countries along“Belt and Road”route, that is, the good institutional quality of the import and export countries can reduce from the institutional level the transaction costs and uncertainty risks brought by the civilization clashes, thereby weakening the inhibitory effect of the civilization clashes on the bilateral trade of countries along the“Belt and Road”route. Furthermore, this effect is more significant for the trade of high contract intensive products. The important enlightenment of this conclusion is that even if there is a great difference in civilizations among the countries along the Belt and Road route, the countries can still weaken and resolve the trade risks that may be caused by the civilization clashes through improving their own institutional quality, so as to promote the development of bilateral trade in the region.

Key words: “Belt and Road”, civilization clashes, institutional boundary, bilateral trade

WANG Ying. The Impact of Civilization Clashes on the Bilateral Trade of Countries along the“Belt and Road”Route under the Institutional Boundary[J]. JOURNAL OF CONTEMPORARY FINANCE AND ECONOMICS, 2019, 0(2): 82-93.

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