BUS613: Advanced International Business

Although many studies have justified investment into transport facilities as a stimulator of economic growth of a country or region, most of the economic impact studies concerning seaborne trade have focused on a particular seaport or a region and a clear picture of how seaborne trade benefits the world economies remains elusive. In the context of the Port of Liverpool, Kinsey argued that the impact of ports on the local economy was declining, with a decreased number of jobs directly dependent on the port at that time. British ports were no longer major employers and the industrial inter-related complexities no longer existed, further reducing the impact of ports on the local economy. Two relatively recent studies, one in the context of South Korea and another in the context of China, have also argued that ports are having declining effects on the economy. In particular, Jung identified that from 1990 to 2008, South Korea experienced 87.5% decrease in the direct port employment creation effect per billion Korean won. Despite no significant impact of seaborne trade on economic growth, Deng et al. revealed significant positive association between regional economy and value added activity at Chinese ports. The reasons for such association could be that Deng et al. included total volume of imports and exports in the value-added activity construct, which is actually part of the port demand (i.e. seaborne trade) construct.

The benefits of investing in transport infrastructure are not limited to travel-time saving. Lakshmanan showed that improved freight services lead to growing trade, followed by improved labor supply and technical diffusion. Some port impact studies in the context of the USA, European countries, China, and South Africa have observed significant impact of port activity on regional/national economies. Yochum and Agarwal concluded that some firms located in Hampton, USA, would experience a severe economic penalty due to a shortage of ports. Bottasso et al. analysed the impact of ports on local employment, using a sample of 560 regions located in 10 West European countries. They found that every million tons of net port throughput would create about 400–600 jobs in the region. Furthermore, Bottasso et al. found that every 10% increase in port throughput can generate a 6–20% increase in the GDP of the regions and can have a spillover effect on neighbouring regions in the range of 5–18%. In the context of China, Shan et al. found that 1% increase in port cargo throughput can increase GDP per capita growth by 7.6%, and the port throughput of a country has a positive impact on neighbouring economies. Similarly, Chang et al. revealed that the South African economy could suffer a 17% loss due to a single unit shortage in port activity.

A summary of selected port impact studies since the 1980s is presented in Appendix A. Most of these studies employed either input–output analysis or regression analysis, and focused only on a particular port of a country or region. What is lacking is that none of those studies considered port infrastructure quality and logistics performance but focused solely on port throughputs. Therefore, the present study examines the wider economic benefits of port infrastructure quality, logistics performance, and seaborne trade through analysis of national-level data of 91 countries.