The trade potential of grain crops in the countries along the Belt and Road: evidence from a stochastic frontier model

Abstract

This study employs the stochastic frontier model (SFM) to analyze trade potential and efficiency in wheat and maize among Belt and Road Initiative (BRI) countries from 2002 to 2021, encompassing 45 countries for wheat trade and 55 for maize trade. The empirical findings reveal that economic development level, population growth, government efficiency, political stability, and regulatory quality are critical determinants of trade efficiency. Notably, World Trade Organization (WTO) membership exhibits a negative correlation with trade efficiency, potentially reflecting challenges in rule implementation and opportunity utilization among member states. In the context of maize trade, increased arable land area is inversely associated with efficiency, suggesting potential issues in managing large-scale agricultural regions or optimizing land use. The BRI’s impact on trade efficiency varies across countries, with Turkey and Hungary showing improved wheat trade efficiency, while Ethiopia and Georgia experienced declines. During the COVID-19 pandemic, effective disease management strategies and diversified trade mechanisms significantly influenced trade efficiency. Furthermore, the study reveals that larger economies do not necessarily outperform small and medium-sized economies in terms of trade potential. These findings contribute significantly to the literature on agricultural trade and offer valuable insights for policymakers, emphasizing the importance of enhancing government efficiency, political stability, and regulatory quality in the context of regional economic development initiatives such as the BRI. This research underscores the need for tailored approaches to trade policy and agricultural management, considering the unique characteristics and challenges faced by different economies along BRI.