All aboard : the effects of port development

Author / Creator

Ducruet, César, author

Available as

Online

Summary

By using local land intensively, ports put pressure on land prices and crowd out other economic activity. Using the introduction of containerized shipping -- a relatively land-intensive technology ...

By using local land intensively, ports put pressure on land prices and crowd out other economic activity. Using the introduction of containerized shipping -- a relatively land-intensive technology -- we find an important role for this effect. At the local level, we find that the causal effect of the shipping boom caused by containerization on population is zero -- port development increases city population by making a city more attractive, but this well-known market access effect is fully offset by the crowding-out mechanism. At the aggregate level, while we find overall welfare gains from containerization, our quantitative model featuring endogenous port development also implies i) sizeable welfare costs associated with the increased land-usage of ports, and ii) sizeable gains from cities' endogenous specialization across port- and non-port activities. These mechanisms are particularly important for targeted port development policies, which we illustrate using the Maritime Silk Road.

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