Trade Potential and Efficiency of the Countries Along the B&R: Based on Trade Diversification, Concentration and Complementarity

The bilateral trade flow data in this paper is a collection of the 35 countries along "The Belt and Road" from 1995 to 2014. After getting the national trade efficiency and trade potential estimation, heterogeneous panel cointegration estimation methods (FMOLS and PDOLS) are used to analyze the influencing factors of trade efficiency and trade potential from three aspects: trade diversification, trade concentration and trade complementarity index. The lower the degree of trade diversification and the higher the degree of trade centralization are, the greater the potential of the country's trade is；the lower the degree of trade diversification and the higher the degree of trade centralization are, the more trade efficiency of the country is; for the bilateral trade volume, the higher the degree of trade complementarity between the two countries is, the greater the trade potential and trade efficiency between them is.