Maritime connectivity, transport infrastructure expansion and economic growth: A global perspective

Abstract

Improving transport connectivity has become increasingly significant to international trade research and transport policy agendas. Little has been done so far to investigate the direct association between maritime connectivity and economic growth, let alone the exact effect magnitude. As the connection between ports, local economies, and global logistics networks becomes ever closer, the economic role of port connectivity deserves closer attention. This paper uses the Panama Canal expansion as a quasi-natural experiment, and proposes a dynamic difference-in-differences (DID) method for making causal inferences about the impact of port connectivity on regional economic growth. This study leverages data mining of multiple sources of satellite data to provide innovative measures of ship movement, port area, and economic activity. We construct an index based on the global shipping network data from the Automatic Identification System (AIS) to measure the extent to which the ports are exposed to the canal expansion. This allows careful handling of the endogeneity problem. Change in the port area is used as a proxy for port capacity expansion, and is identified via satellite imaging. Night light data provide a measure of regional economic activity around the ports, and of the effect of port connectivity on regional economic growth. Our findings suggest that improvements in port connectivity have a significant and fairly durable stimulating effect on regional economic growth, and that port infrastructure expansion is one potential channel for realizing this effect.