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Transport in the Baltic Sea Region: Perspectives for the Economies in Transition Die Deutsche Bibliothek - CIP-Einheitsaufiiahme

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Transport in the Baltic Sea Region: Perspectives for the Economies in Transition Die Deutsche Bibliothek - CIP-Einheitsaufiiahme Kieler Sonderpublikationen Institut fur Weltwirtschaft an der Universitat Kiel Hans Bohme • Claus-Friedrich Laaser Henning Sichelschmidt • Riidiger Soltwedel Transport in the Baltic Sea Region: Perspectives for the Economies in Transition Die Deutsche Bibliothek - CIP-Einheitsaufiiahme Transport in the Baltic Sea region : perspectives for the economies in transition / Institut fiir Weltwirtschaft an der Universitat Kiel. Hans Bohme ... - Kiel: Inst. fur Weltwirtschaft, 1998 (Kieler Sonderpublikationen) ISBN 3-89456-167-X © Institut fiir Weltwirtschaft an der Universitat Kiel 1998. Alle Rechte vorbehalten. Ohne ausdriickliche Genehmigung des Verlages ist es auch nicht gestattet, das Werk oder Teile daraus in irgendeiner Form (Fotokopie, Mikrofilm oder einem anderen Verfahren) zu vervielfaltigen oder unter Verwendung elektronischer Systeme zu verarbeiten oder zu verbreiten. Printed in Germany ... ISSN 1434-5013 Preface The Baltic Sea region has been subject to processes of both disintegration and integration. On the southeastern shore of the Baltic Sea, former CMEA trade relations as well as the traditional system of Soviet socialist division of labour has disintegrated after 1991. With the exception of the Russian Federation's oblasts of Leningrad and Kaliningrad, the transition economies in the Baltic Sea region have turned to the West and are eager to participate in the process of European integration. Poland and Estonia participate in the negotiations for EU enlargement, sooner or later Latvia and Lithuania will follow suit. Physically, integration is brought about by transport that results from trade and other economic interchange. Hence, trade and further economic develop- ment may be hampered by all severe obstacles to transport—in the fields of transport infrastructures, of transport markets, of complementary legal frame- works, or of the daily transport business. In the present study, the authors analyse the current pattern of transport in the Eastern Baltic Sea region with special reference to the economies in transition, and identify and assess the various obstacles to transport in this region. Based on the empirical findings, the study presents economic policy recommendations and shows potential remedies to overcome such obstacles. Although missing infra- structure links and insufficient capacities are easiliy visible, the authors hold that "software" problems (arising from regulatory regimes, but in particular from administrative procedures) are more pressing than infrastructure deficiencies and should be addressed with urgency. The study was commissioned jointly by the Stockholm Chamber of Com- merce and the Swedish Transport and Communications Research Board (Kom- munikations Forsknings Beredningen, KFB) for the Baltic Sea Business Summit 1998, which was held in Stockholm on January 18-19, 1998. Research work was performed as a joint effort by Hans Bohme, Claus-Friedrich Laaser, Henning Sichelschmidt, and Riidiger Soltwedel, with Hans Bohme contributing from his vast knowledge of maritime transport in general and in the Baltic Sea region in particular, and with Rudiger Soltwedel acting as the leader of the re- search project. The authors would like to thank officials of the European Conference of Min- isters of Transport (ECMT), Paris, the European Bank for Reconstruction and Development (EBRD), London, the European Commission, Direction Generale VII (Transport), Brussels, the European Investment Bank (EIB), Luxembourg, the German Truckers Association (Bundesverband Giiterkraftverkehr und Logi- stik, BGL), Frankfurt/Main, and the German Freight Forwarders Association IV Preface (Bundesverband Spedition und Lagerei, BSL), Bonn, for their support in provid- ing the opportunity of background discussions, and statistical offices for provid- ing additional statistical material not otherwise available. Numerous transport and transport-related firms doing business in the region contributed valuable in- formation from their everyday experience. The authors are also grateful for sup- port in obtaining data as well as for additional discussions with Hans Jeppson from the Stockholm Chamber of Commerce and Inge Vierth from KFB. Within the Kiel Institute, the authors were supported by Ute Heinecke, Maren Horet, and Kirsten Lade, who transformed the manuscript into a printable text version, and by Ursula Fett, who prepared the maps. Ulrich Stark helped with gathering and processing data and information. The final editiorialtask rested with Frank-Joachim Ballke, Itta Schulte, and Korinna Werner-Schwarz. To all of them the authors owe thanks.. Kiel, July 1998 Horst Siebert Contents A. Introduction: Trade and Transport in the Baltic Sea Region 1 B. The Importance of the Transport System for Economic Development 5 I. Different Theoretical Approaches to Describe the Role of Transport in the Economy 5 1. The Aggregate Production Function Approach 6 2. The Microeconomic Cost of Location Approach 9 3. The Institutional or Locational Competition Approach 13 II. Empirical Results 14 1. Surveys among Enterprises 14 2. The Aschauer Debate 14 III. Conclusions 17 C. Transport Patterns in the Eastern Baltic Sea Region 20 I. Aspects of Transport Geography 20 II. Existing Infrastructure Facilities 22 1. Sea-Ports and Inland Shipping 23 2. Railways 29 3. Road Network 34 4. Airports 38 III. Present Transport Patterns 39 1. Ports and Shipping Dominating Baltic Sea Traffic 39 2. Aspects of Port Competition 48 3. Domestic Traffic Flows in Baltic Rim EIT 52 VI Contents IV. Future Prospects for Sea Transport in the Baltic 55 1. Growth and Structural Changes 55 2. The End of "Tax-Free": Distortions of the Ferry System Ahead 59 V. Summary 61 D. Obstacles to a Functioning Transport System in the Baltic Sea EIT ;. 63 I. Definitions „ ~ 63 II. Political Issues 65 III. Obstacles Associated With the General Legal Framework 68 1. International Treaties 68 2. Market Access 70 3. Property Rights and Privatization 73 4. Price Regulation and Licensing 81 IV. Infra- and Superstructure Hardware Problems 84 1. The Maritime Sector 84 2. Land and Air Transport 93 V. Obstacles To Trade Caused by Software Problems 106 1. Obstacles in Ports and Shipping 106 2. Land and Air Transport 112 VI. Evaluation of Obstacles 125 E. Conclusions and Recommendations: What Can Be Done? 127 I. Strategies to Remove Existing Software Obstacles 127 1. Requirements for Public Policy Action 127 2. Private Strategies to Overcome Obstacles 132 II. A Perspective on Infrastructure Provision in the Baltic Sea Region 135 Contents VII Annex 145 I. Different Perspectives on Baltic Sea Trade Figures 145 II. Quality and Reliability of Empirical Data on Transport Flows.... 146 1. Conceptual Statistical Problems 146 2. Statistical Problems of a Transitional Nature 158 3. Problems of Using Western Statistics 160 4. Concluding Remarks , 164 III. Evaluation of the Relative Relevance of Obstacles 166 IV. Maps and Tables 168 References 194 List of Maps and Tables Map Al — The Baltic Rim Economies in Transition 168 Map A2 — Motorways in Poland and Lithuania 169 Table Al — Per Capita Income and Total GDP in Baltic Rim countries, 1995 ._. 170 Table A2 — Rail Networks in Baltic Rim Countries, 1994 170 Table A3 — Road Networks in Baltic Rim Countries, 1995 171 Table A4 — Seaborne Cargo Turnover of All Sea Ports in Estonia, Latvia, Lithuania, Poland, and the Russian Baltic Rim Oblasts, 1980-1996 172 Table A5 — Seaborne Cargoes Unloaded and Loaded in the Ports of Estonia, Latvia, Lithuania, Poland, and the Russian Baltic Rim Oblasts, 1990-1996 173 Table A6 — Seaborne Cargoes Unloaded and Loaded in Estonia ac- cording to Cargo Categories: Total versus Transit Traffic, 1994-1996 174 Table A7 — Seaborne Cargoes Unloaded and Loaded in Latvia according to Cargo Categories, 1990-1996 175 Table A8 — Seaborne Cargoes Unloaded and Loaded in Poland accord- ing to Cargo Categories, 1992-1995 176 Table A9 — Cargo Turnover in Polish Sea Ports according to Cargo Categories, 1980-1996 177 Table A10 —Seaborne Cargoes Unloaded in Estonia, Latvia, and Lithuania according to Selected Countries of Loading, 1991-1996 178 Table All —Seaborne Cargoes Loaded in Estonia, Latvia, and Lithuania according to Selected Countries of Unloading, 1991-1996.. 179 Table A12 —Seaborne Cargoes Unloaded and Loaded in Poland ac- cording to Selected Countries of Loading and Unloading, 1980-1996 180 Table A13 —Seaborne Cargoes Unloaded and Loaded in the USSR ac- cording to Selected Countries of Loading and Unloading, 1980-1996 181 List of Maps and Tables IX Table A14 —Seaborne Cargo Turnover in the Ports of Estonia, Latvia, Lithuania, Poland, and the USSR according to Selected Countries of Origin and Destination, 1988-1996 182 Table A15 —Modal Split in Merchandise Traffic of Estonia, 1990-1996 . 183 Table A16 —Modal Split in Domestic Merchandise Traffic of Latvia, 1980-1995 184 Table A17 —Modal Split in Domestic Merchandise Traffic of Lithuania, 1989-1995 185 Table A18 —Modal Split in Domestic Merchandise Traffic of Poland, 1990-1995 ."". 186 Table A19 —Modal Split in Domestic Merchandise Traffic of Russia, 1990-1994 187 Table A20 —Total Export and Import Volumes of the States of the Baltic Sea Region, 1980-1995 188 Table A21 —Different Perspectives on Trade in the Baltic Sea Region, 1990 and 1993 189 Table A22 — Intra-Baltic Exports und Imports according to Countries, 1993 190 Table A23 —Intra-Baltic Sea Total Exports and Imports, 1993 191 Table A24 — Intra-Baltic Exports und Imports according to Countries, 1990..... 192 Table A25 —Intra-Baltic
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