specifications in order to build a lower bound and an upper bound for our estimates. In the lower bound scenario, we prevent mode switching between the pre‐BRI and the post‐BRI shipping routes so that the decreases in shipping times are solely driven by a denser network of links. Under this assumption, the average decrease in shipping time is 1.2 percent across all country pairs. In the upper bound scenario, we allow for mode switching, so that some trade routes can move from maritime links to rail‐based links and hence experience a larger gain in shipping time. In this scenario, the decrease in shipping time at the world level reaches 2.5 percent. Overall, our results underline the importance of network effects in transportation and feature a wide geographical dispersion in the benefits from the BRI. Indeed, our estimated gains are spread across the world, with all countries experiencing a decrease in shipping time with at least one of their partners. BRI economies experience a decrease in shipment times ranging between 1.7 and 3.2 percent on average. The largest estimated gains are for the trade routes connecting East and South Asia. We also find that shipment times along economic corridors fall substantially, ranging between 3.6 percent for the China‐Mongolia‐Russia Economic Corridor (CMREC) to 11.9 percent for the China‐Central Asia‐West Asia Economic Corridor (CCWAEC).

We then use Hummels and Schaur (2013) sectoral estimates of “value of time” to transform reductions in shipping time into reduction in ad‐valorem trade costs. Since Hummels and Schaur’s (2013) estimates are very disaggregated (at the HS2 or HS4 level), we need to aggregate them for each country pair using appropriate trade weights. We work with 47 sectors based on the Global Trade Analysis Project (GTAP) categorization and excluding services. Since each of those sectors contains many HS2 or HS4 categories, the composition of trade flows within each GTAP sector differs across country pairs. Hence, we compute the “value of time” for each pair of countries and GTAP sector to reflect the actual composition of each sector within each origin‐destination flow. These country pair‐sector values of time can be further aggregated to quantify changes in trade costs by country.

The results combining our GIS network analysis and the ad‐valorem conversion suggest that implementing all BRI transport infrastructure projects will result in a large decrease in trade costs for many countries. For the world, the reduction of aggregate trade costs ranges between 1.1 percent in the lower bound scenario and 2.2 percent in the upper bound scenario. For the BRI economies, the change in trade costs will range between 1.5 and 2.8 percent, under the lower and upper bound scenario respectively. As for shipping times, the gains in trade costs exhibit significant heterogeneity across pairs of countries, with East Asia and Pacific as well as South Asia being the regions with the larges average reductions. Finally, trade costs have the sharpest drops along corridors, ranging between 2.4 percent for the China‐Mongolia‐ Russia Economic Corridor (CMREC) and 10.2 percent for the China‐Central Asia‐ West Asia Economic Corridor (CCWAEC).

The focus of this paper is the impact of BRI‐related transport infrastructure projects on shipment times and trade costs. But the Belt and Road Initiative includes efforts to improve the efficiency of customs, reduce border delays or to improve management of economic corridors. As an extension of our main database, we present two scenarios where those elements are explicitly taken into account. We find that the implementation of complementary policy reforms magnifies the impact on shipment times and trade costs, especially along the corridors. For instance, if border delays were reduced by half, the reduction of shipment times along corridors would range between 7.7 percent for the China‐Indochina Peninsula Economic Corridor (CICPEC) and 25.5 percent of the China‐Central Asia‐West Asia Economic Corridor 3