The impacts of port infrastructure and logistics performance on economic growth: the mediating role of seaborne trade

Ziaul Haque Munim,Hans-Joachim Schramm

doi:10.1186/s41072-018-0027-0

Abstract

Considering 91 countries with seaports, this study conducted an empirical inquiry into the broader economic contribution of seaborne trade, from a port infrastructure quality and logistics performance perspective. Investment in quality improvement of port infrastructure and its contribution to economy are often questioned by politicians, investors and general public. A structural equation model (SEM) is used to provide empirical evidence of significant economic impacts of port infrastructure quality and logistics performance. Furthermore, analysis of a multi-group SEM is performed by dividing countries into developed and developing economy groups. The results reveal that it is vital for developing countries to continuously improve the quality of port infrastructure as it contributes to better logistics performance, leading to higher seaborne trade, yielding higher economic growth. However, this association weakens as the developing countries become richer.

Highlights

Trade between nations has always made a significant contribution in terms of increasing wealth among the world population (Smith, 1776)
In order to address the significance of port infrastructure quality, logistics performance and seaborne trade, the present study investigates the following research questions (RQs): (1) Does the port infrastructure quality, logistics performance and seaborne trade of a country have any significant impact on the country’s economy? (2) Does the impact differ between developed and developing economies? To answer RQ1, a structural equation model (SEM) is developed to analyse how port infrastructure and logistics performance of a country affects seaborne trade, as well as the economy of a country
The results show that improvement in quality of port infrastructure and logistics performance would bring the greatest benefits to the economy of a country

Summary

Introduction

Trade between nations has always made a significant contribution in terms of increasing wealth among the world population (Smith, 1776). 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. H1 (f ): The quality of port infrastructure has a positive effect on national economy mediated through logistics performance and seaborne trade. When it comes to multi-facet, hardly direct measurable issues like logistics performance and seaborne trade, the essence to develop latent constructs using multiple observed indicators becomes relevant. Port infrastructure quality, logistics performance and seaborne trade may have varying impact on different economies of the world. The mediated effect of port infrastructure quality on national economy through logistics performance and seaborne trade is significant in developing economies. Logistics performance has a positive effect on national economy for both developed and developing economies

Discussion and conclusion

Findings

13 EU Countries