Trade effects on happiness in Asia

The Belt and Road Initiative is an unparalleled China-initiated international infrastructure project. Since its launch, international trade has already increased in the participating countries - a trend that is only there to stay. However, this development is not seen only in a positive light, and to date it is unclear whether it will exclusively benefit the participating countries in the long term or whether it will drag them into debt. In this piece, we investigate possible trade effects that go beyond the proclaimed monetary ones. We check if these projected increases of trade (trade volume and trade freedom) affect mean levels of subjective well-being (SWB) in Asian countries. Applying a fixed effects model, we find no evidence that sheer trade volume nor trade freedom directly affect mean levels of SWB in Asian countries. However, we find measures of wealth (GDP per capita, Human Development Index [HDI]) as well as the unemployment rate to affect SWB at the country level. This may indicate an indirect effect of trade on SWB that is channeled by GDP. Nonetheless, there could be a link between trade and SWB, as it may take some time for the effects/changes of trade to trickle down to SWB. Other possibilities are discussed in detail.