path algorithm. From this reference point, we run multiple “improved” scenarios that account for the planned infrastructure projects linked to the BRI and we assess the reduction in shipping times resulting from these projects. The list of projects we consider and the associated assumptions for the computation of shipment time is described in the next sub‐section.

We carry out the analysis using a GIS software which allows us to precisely map the current transportation network and then to enrich it with the planned infrastructure improvements that can be linked to the BRI. In particular, we use ArcGIS Network Analyst which provides network‐based spatial analysis tools for solving complex routing problems. A network solution involves finding the shortest path between two locations, where the length or cost of a path is the total accumulated shipping time computed along the optimal path.

In our analysis, we focus on rail and maritime links, abstracting from road and air connectivity, which allows to simplify the network analysis. Two main reasons justify this approach. First, as discussed in detail below, the large majority of BRI transport projects consist of rail and maritime infrastructure. Second, most international trade travels by sea and, to a smaller extent, by rail. Maritime shipping accounts for 80% in volume and 70% in value of global trade (OECD, 2017) and rail is the second transportation mode used, while only a small portion of international trade travels by road and air. GTAP data indicate that for BRI countries the percentage of international shipments by water and land is around 90%. According to shipping data, this fraction is even higher for China.<sup>4</sup> The nodes of our network in the global database, which serve as both origin and destination in the analysis, are all cities with population greater than 500,000,<sup>5</sup> as well as the two most populous cities in each country (data permitting). This creates a total of 1,000 cities and includes 34 cities with reported population less than 50,000. In our regional database, we use all cities above 100,000 inhabitants within the BRI countries under consideration, which leads a total of 1,964 cities in 71 economies. The network is solved for each origin‐destination pair, with routing determined by shortest time path, adjusting for preference parameters.<sup>6</sup> The use of a network analysis to quantify shipment times and the impact of new and improved transport infrastructure has benefits and drawbacks. On the plus side, a network analysis can be a useful tool to support modeling of international trade flows. It can enhance the understanding of the impact of changes in infrastructure or other factors on an interconnected system allowing to extract information from spatial data. Specifically, a network analysis allows to obtain realistic measures for the time it takes to go from one location to another taking into account the overall quality and quantity of infrastructure, physical

> 4 See Annex 2 for more data on modal shares in the world and in the BRI countries. Air shipment represents a small fraction in terms of trade volume, but a larger one in terms of value since it concerns goods with higher value on average.

> 5 Population sources are https://www.citypopulation.de/world/Agglomerations.html and <u>http://data.un.org/Data.aspx?d=POP&f=tableCode%3A240</u>

> 6 To “attach” cities to elements of the transportation network (a rail segment or a port), a fuzzy tolerance of 10km was used. As a result, any city located more than 10km away from any network element is left as unconnected and de facto excluded from the results.

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