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Port Sophistication and Country Economic Status: Seaports As Indicators of Economic Development†

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Port Sophistication and Country Economic Status: Seaports As Indicators of Economic Development† Port Sophistication and Country Economic Status: Seaports as Indicators of Economic Development† Joan Mileski Texas A&M University Galveston—TAMUG, Texas, USA Cassia Bömer Galvão São Paulo Catholic University—PUC-SP, São Paulo, Brazil Wyndylyn von Zharen Texas A&M University Galveston—TAMUG, Texas, USA Introduction Historically, seaports (hereinafter “ports”) have been critical to a country’s eco- nomic development and serve as a central and necessary component in facili- tating trade. At the same time, the level of sophistication of port operations, infrastructure, and abilities must be congruent with the level of the country’s economy it serves. Ports have undergone important processes of evolution.1 The function of ports has traditionally been related to some aspect of inland growth and economic progress.2 Changes in trade flows and mix, whether im- ports or exports, set the framework for port infrastructure. Each individual product has different logistics characteristics,3 which in turn has an impact † This article was originally submitted to the International Association of Maritime Economists (IAME) and accepted for presentation at the 2015 IAME Conference at Kuala Lumpur. The authors thank CAPES/Brazil and the Fulbright Foundation for sponsoring Cassia B. Galvão, Ph.D. student, in this research project. Authors also appreciate the collaboration of Clarkson Research and Dynamar B.I. in the data collection. Corresponding author: [email protected]. 1 T. Wang, K. Cullinane and D.W. Song, Container Port Production and Economic Efficiency (Hamp- shire, UK: Palgrave-Macmillan, 2005); R. Sanchez and G. Wilmsmeier, “Contextual Port Devel- opment: A Theoretical Approach,” in Essays on Port Economics, Contribution to Economics, eds. P. Coto-Millán, M.A. Pesquera and J. Castanedo (Berlin/Heidelberg: Springer-Verlag, 2010). 2 B. Hoyle, “Global and Local Forces in Developing Countries,” Journal for Maritime Research 2, no. 1 (2000): 9–27. 3 L. Chen and T. Notteboom, “Determinants for Assigning Value-Added Logistics Services to Logis- tics Centers Within a Supply Chain Configuration,” Journal of International Logistics and Trade 10, no. 1 (2012): 3–41; B. Kuipers and J. Eenhuizen, “A Framework for the Analysis of Seaport-Based Logistics Parks,” in Proceedings of the First International Conference on Logistics Strategy for Ports, eds. S. Licheng and T. Notteboom (Dalian: Dalian Maritime University Press, 2004), pp. 151–171. Ocean Yearbook 30: 541–563 © koninklijke brill nv, leiden, ���6 | doi �0.��63/97890043��595_0�0 <UN> 542 Maritime Transport on infrastructural level.4 Thus, trade of certain tangible goods can provide the catalyst for increased port development. Trade mix is defined as the structure of merchandise trade in categories such as agriculture products, raw materi- als (including mining), oil and gas, and manufactured products.5 The higher the level of manufactured goods traded in a country, the higher the trade-mix sophistication and the higher the level of economic development.6 Significant discrepancies between port development and a country’s economic development could result in a port’s infrastructure being over or under built. The concept of “we will build it, and they will come” has left some countries with expensive sub-utilized or unutilized infrastructure. Therefore, all port stakeholders such as port infrastructure managers, policy-makers, and bank managers financing port expansion have an interest in what drives changes in trade. Their need for tools to review investment strategies is acute. There has been a saturation of academic literature focusing on port perfor- mance in terms of efficiency (e.g., container-terminal efficiency7 and efficient ports or benchmarking productivity8). Economists have extended analyses for measuring port effectiveness such as market effectiveness and in the con- text of “leanness.”9 It appears, though, that measurement of performance in ports has focused on internal system performance, primarily financial, and on the provision of vessel-handling and cargo-handling capacity as a proxy for the assessment of internal functional activities.10 We have found no studies 4 J.P. Rodrigue and T. Notteboom, “The Terminalization of Supply Chains: Reassessing the Role of Terminals in Port/Hinterland Logistical Relationships,” Maritime Policy & Man- agement 36, no. 2 (2009): 165–183. 5 World Bank, World Development Indicators 2008, available online: <http://data .worldbank.org/sites/default/files/wdi08.pdf>. 6 Id. 7 W.K. Talley, “Optimum Throughput and Performance Evaluation of Marine Terminals,” Maritime Policy & Management 15 (1988): 327–331; W.K. Talley, “Performance Indicators and Port Performance Evaluation,” Logistics and Transportation Review 30 (1994): 339–352; M.M. Gonzalez and L. Trujillo, “Efficiency Measurement in the Port Industry: A Survey of the Empirical Evidence,” Journal of Transport Economics and Policy 43, no. 2 (2009): 157–192. 8 J. Tongzon and W. Heng, “Port Privatization, Efficiency and Competitiveness: Some Empirical Evidence from Container Ports (Terminals),” Transportation Research Part A 39 (2005): 405–424. 9 A.C. Paixao and P.B. Marlow, “Fourth Generation Ports – A Question of Agility?” Interna- tional Journal of Physical Distribution and Logistics Management 33, no. 4 (2003): 355–376. 10 M. Brooks and K. Cullinane eds., “Special Issue: Devolution, Port Governance and Port Performance,” Research in Transportation Economics, vol. 17 (2007); M. Brooks and A. Pallis eds., “Special Issue: Port Performance and Strategy,” Research in Transportation Business and Management, vol. 8 (2013). <UN>.
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