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A stochastic frontier model of the productive efficiency of Korean container terminals

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Author Info
Kevin Cullinane
Dong-Wook Song
Abstract

A central objective of port privatization and/or deregulation policies is stimulating greater efficiency by engendering a more competitive market and commercial approach to management. Korea provides a prime example of a nation that is implementing such policies. Also, its ports play a pivotal role in world shipping, particularly in the ever-burgeoning container market. The success of these policies in increasing the productive efficiency of Korean container terminals is assessed. The UK container terminal sector provides a useful benchmark for comparison since privatization and deregulation have formed an integral part of UK port reforms for nearly 20 years and the effect on efficiency, having had time to mature, will be much easier to gauge. The stochastic frontier model is justified as the chosen methodology for estimating productive efficiency levels and is applied to cross-sectional data under a variety of distributional assumptions. A panel data model is also estimated. Results are consistent and suggest (1) The degree of private sector involvement in sample container terminals is positively related to productive efficiency and (2) Improved productive efficiency has followed the implementation of privatization and deregulation policies within the Korean sector. Even though not categorical, these conclusions are important because the market for container throughput is internationally competitive and if policies which promote competition between Korean container terminals lead to greater productive efficiency, this will inevitably make the sector as a whole more competitive internationally.

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Article provided by Taylor and Francis Journals in its journal Applied Economics.

Volume (Year): 35 (2003)
Issue (Month): 3 (January)
Pages: 251-267
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Handle: RePEc:taf:applec:v:35:y:2003:i:3:p:251-267

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Lourdes Trujillo & Beatriz Tovar, 2007. "The European Port Industry: An Analysis of its Economic Efficiency," City University Economics Discussion Papers 07/05, Department of Economics, City University, London. [Downloadable!]
    Other versions:
  2. Carlos Pestana Barros & Shunsuke Managi, 2008. "Productivity Drivers in Japanese Seaports," Working Papers 2008/15, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.. [Downloadable!]
  3. Santiago Herrera & Gaobo Pang, 2006. "Efficiency Of Infrastructure: The Case Of Container Ports," Anais do XXXIV Encontro Nacional de Economia [Proceedings of the 34th Brazilian Economics Meeting] 124, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]. [Downloadable!]
  4. Herrera, Santiago & Pang, Gaobo, 2005. "Efficiency of public spending in developing countries : an efficiency frontier approach," Policy Research Working Paper Series 3645, The World Bank. [Downloadable!]
  5. Juan Díaz-Hernández & Eduardo Martínez-Budría & Sergio Jara-Diaz, 2008. "Parametric estimation of inefficiency in cargo handling in Spanish ports," Journal of Productivity Analysis, Springer, vol. 30(3), pages 223-232, December. [Downloadable!] (restricted)
  6. Santiago Herrera & Gaobo Pang, 2006. "How Efficient is Public Spending in Education?," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE. [Downloadable!]
  7. Ahmed Salem Al-Eraqi & Carlos Pestana Barros & Adli Mustaffa & Ahamad Tajudin Khader, 2007. "Evaluating the Location Efficiency of Arabian and African Seaports Using Data Envelopment Analysis (DEA)," Working Papers 2007/19, Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon.. [Downloadable!]
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