Abstract
Panama has five main ports: Balboa and PSA Panama International on the Pacific, and Cristóbal, Manzanillo and Colon Container Terminal (CCT) on the Caribbean side. The government of Panama originally operated the ports of Balboa and Cristóbal. After being transferred from the United States government, most of these ports were privatized in the late 1990s. During this period, some ports in the United States have moved away from operating to non-operating. There are more private sector involvements and public–private partnerships. However, in the US there are few full asset privatizations as was done in Panama. This range of privatizations provides the opportunity to study the effects of various types of privatization on port production. We use financial econometric techniques to assess port performance during government operation and private sector operation. The results of the study provide an estimate of the savings and effectiveness gains from privatizations. Few studies examine effectiveness, beyond questionnaires of users. However, especially for transshipment ports as are the case in Panama, service variables, along with price, are very important in determining demand for service. This study compares the effectiveness of Panama privatized ports with US ports in which there are degrees of privatization.
Highlights
Globalization and international trade are increasingly important functions for ports and maritime transportation
There have been a variety of papers that attempt to quantify the relationship between economic efficiency and port privatization
These include Shashikumar (1998) who examined the manner in which Indian ports are privatized, Cullinane, Song, and Gray (2002) who used a stochastic frontier model to estimate efficiency in different privatization schemes and Wang and Knox (2011) who utilized a stochastic frontier model to estimate efficiency impacts of privatization on US ports
Summary
Globalization and international trade are increasingly important functions for ports and maritime transportation. There have been a variety of papers that attempt to quantify the relationship between economic efficiency and port privatization. There have been a variety of studies of port choice and service characteristics of ports These include Murphy, Daley and Dalenberg (1991) who developed a set of factors affecting port choice in order of importance to carriers. Ugboma, et al (2007) analyzed service quality in two Nigerian ports They collected data on ports using a questionnaire, which was given to port uses and was developed from focus groups and the literature. Rugman and Verbeke (1993) applied Porter’s diamond to the port industry, concluding that the port’s position in the market is determined by six main factors: (a) factor conditions; (b) demand conditions; (c) related and supporting industries; (d) the strategy of competitors; (e) chance; and (f) government
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