# **1. Introduction**

The Belt and Road Initiative (BRI) is a development strategy proposed by China that focuses on connectivity and cooperation on a trans‐continental scale. It roughly follows and expands the old Silk Road on the land side and complements it with a maritime part to build a series of economic corridors with the goal of boosting trade and stimulating economic growth across Asia, Europe and Eastern Africa.<sup>2</sup> The range of initiatives and activities that will be part of the BRI is very wide, including policy coordination, infrastructure, trade and investment, financial and people‐to‐people exchanges. In this paper, we focus on the consequences of transport infrastructures linked with the Belt and Road Initiative and quantify the associated decrease in shipment times and ultimately trade costs. We build two new databases with estimates of trade cost changes across sectors and country‐pairs and provide an analysis of the systemic impact that the BRI may have on trade costs for all countries in the world.

The new databases presented in this paper are composed of two sets of data that can be used to address different research questions. The global database contains information based on an analysis of 1,000 cities in 191 countries and 47 sectors. The regional database contains the same variables but focuses on the 71 economies that are part of the Belt and Road Initiative and is computed with a higher degree of granularity.<sup>3</sup> In particular, the focus on fewer countries allows to include in the analysis a larger number of cities.

In terms of method, we first use a combination of geographical data and network algorithms to compute the reduction in shipping times between all city pairs in our analysis. As a starting point, we use the current network of railways and ports across the world and employ a shortest path algorithm to compute an estimate of the current shipping times between every pair of cities. We use assumptions regarding the average speed for different transportation modes as well as data for the processing time when reaching a port or when crossing borders. From this reference point, we run a series of “improved scenarios”, where the transportation network is enriched with all planned infrastructure projects that are linked to the Belt and Road Initiative. We show that by increasing the number of rail and port connections and by improving the speed and processing times for improved rail segments and ports, the Belt and Road Initiative can significantly contribute to decreases in shipping times between a large number of city‐pairs in BRI economies as well as in many other countries.

A complex issue is how to deal with the possible switch of transport modes once BRI infrastructure projects are completed. In computing the shipping times post‐BRI, we consider two alternative

> 2 The Belt and Road Initiative is structured around two main components, (i) the Silk Road Economic Belt (SREB), and (ii) the 21st Century Maritime Silk Road (MSR). More specifically, the “Belt” links China to Central and South Asia and onward to Europe, while the “Road” links China to the nations of South East Asia, the Gulf Countries, East and North Africa, and on to Europe. Those parts are themselves organized around six economic corridors: (1) the China‐Mongolia‐Russia Economic Corridor; (2) the New Eurasian Land Bridge; (3) the China–Central Asia–West Asia Economic Corridor; (4) the China–Indochina Peninsula Economic Corridor; (5) the China‐Pakistan Economic Corridor; and (6) the Bangladesh‐China‐India‐Myanmar Economic Corridor.

> 3 There is no official list of countries in the Belt and Road Initiative. For this study, we focused on a list of 71 economies (Annex 1). Countries in the list should be interpreted as economies that are geographically located along the Belt and Road as proposed by China.

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