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East Asian Economic Review Vol. 15, No. 2, 2011. pp. 3-32.

DOI https://dx.doi.org/10.11644/KIEP.JEAI.2011.15.2.228

Number of citation : 7

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Investing in Port Infrastructure to Lower Trade Costs in East Asia

Author

Kazutomo Abe

Tokyo Denki University; The World Bank

kazutomo.abe@nifty.com

John S. Wilson

jswilson@worldbank.org
Creative Commons Attribution License

EAER is an open access journal distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license.

Abstract

We examine how port infrastructure affects trade and role of transport costs in driving exports and imports for East Asia. Existing studies use survey indexes to explain transport costs. These do not link investment in port infrastructure to transport costs. We include in our estimates a variable to represent the congestion of the ports to explain the transport costs. We find that the port congestion has significantly increased the transport costs from East Asia to the United States. Our analysis suggests that increase in port capacity by 10 percent could cut transport cost in East Asia by up to three percent. This translates into a 0.3 to 0.5 percent across-the-board tariff cut.

JEL classification: F13, F15

Keywords

International Trade, Trade Costs, East Asia, ASEAN, China, Trade Facilitation, Infrastructure, Gravity Model

Language

English

References

  1. Abe, K. and Wilson, J. S. 2008. "Trade, Transparency, and Welfare in the Asia Pacific." journal of International Economic Studies, 12.2, pp. 33-78.
  2. Anderson, J. and van Wincoop. 2004. "Trade Costs." journal of Economic Literature, XLII, pp. 691-751. CrossRef
  3. Bank of Japan. 2005. "Revision of Compilation Methodology for Balance of Payment Statistics on Sea Freight Fares and Freight Insurance Premiums." at the homepage of the Bank of Japan.
  4. Blonigen, B. and Wilson, W. 2008. "Port Efficiency and Trade Flows." Review of International Economies, 16.1, pp. 21-36. CrossRef
  5. Clark, X., Dollar, D. and Micco, A. 2004. "Port Efficiency, Maritime Transport Costs and Bilateral Trade." NBER Working Paper Series, 10353. CrossRef
  6. Helbel, M., Sheperd B. and Wilson, J. 2007. Transparency and Trade Facilitation in the Asia Pacific: Estimating the Gains from Reform. Asia Pacific Economic Cooperation and the WorldBank.
  7. Hummels, D. 2007. "Transportation Costs and International Trade in the Second Era of Globalization." journal of Economic Perspectives, 21.3, pp. 131-154. CrossRef
  8. Hummels, D. and Lugovskyy, V. 2006. "Are Matched Partner Trade Statistics a Usable Measure of Transportation Costs?" Review of International Economics, 14.1, pp. 69-86. CrossRef
  9. Limao, N. and Venables, A.J. 2001. "Infrastructure, Geographical Disadvantage, Transport Cost, and Trade." The World Bank Economic Review, 15.3, pp. 451-479. CrossRef
  10. Shibasaki, R. et al. 2004. "Model Expansion of International Container Cargo Simulation for Cross Border Transport Policy in Southeast Asia." unpublished manuscript.
  11. Simeon, D, Freund, C. and Pham, C. S. 2006. "Trading on Time." Policy Research Working Paper Series, 3909. The World Bank.