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Estimating the Effects of the Container Revolution on World Trade

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  • Daniel M. Bernhofen
  • Zouheir El-Sahli
  • Richard Kneller

Abstract

The introduction of containerization triggered complementary technological and organizational changes that revolutionized global freight transport. Despite numerous claims about the importance of containerization in stimulating international trade, econometric estimates on the effects of containerization on trade appear to be missing. Our paper fills this gap in the literature. Our key idea is to exploit time and cross-sectional variation in countries’ adoption of port or railway container facilities to construct a time-varying bilateral technology variable and estimate its effect on explaining variations in bilateral product level trade flows in a large panel for the period 1962-1990. Our estimates suggest that containerization did not only stimulate trade in containerizable products (like auto parts) but also had complementary effects on non-containerizables (like automobiles). As expected, we find larger effects on North-North trade than on North-South or South-South trade and much smaller effects when ignoring railway containerization. Regarding North-North trade, the cumulative average treatment effects of containerization over a 20 year time period amount to about 700%, can be interpreted as causal, and are much larger than the effects of free trade agreements or the GATT. In a nutshell, we provide the first econometric evidence for containerization to be a driver of 20th century economic globalization.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4136.

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Date of creation: 2013
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Handle: RePEc:ces:ceswps:_4136

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Keywords: containerization; 20th century global transportation infrastructure;

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References

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  1. Clark, Ximena & Dollar, David & Micco, Alejandro, 2004. "Port efficiency, maritime transport costs, and bilateral trade," Journal of Development Economics, Elsevier, vol. 75(2), pages 417-450, December.
  2. Bruce A. Blonigen & Wesley W. Wilson, 2008. "Port Efficiency and Trade Flows," Review of International Economics, Wiley Blackwell, vol. 16(1), pages 21-36, 02.
  3. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
  4. Mokyr, Joel, 1992. "The Lever of Riches: Technological Creativity and Economic Progress," OUP Catalogue, Oxford University Press, number 9780195074772, September.
  5. Theo Notteboom & Jean-Paul Rodrigue, 2008. "Containerisation, Box Logistics and Global Supply Chains: The Integration of Ports and Liner Shipping Networks," Maritime Economics and Logistics, Palgrave Macmillan, vol. 10(1-2), pages 152-174, March.
  6. Kei-Mu Yi, 2000. "Can vertical specialization explain the growth of world trade?," Staff Reports 96, Federal Reserve Bank of New York.
  7. Robert C. Feenstra & Robert E. Lipsey & Haiyan Deng & Alyson C. Ma & Hengyong Mo, 2005. "World Trade Flows: 1962-2000," NBER Working Papers 11040, National Bureau of Economic Research, Inc.
  8. David Hummels, 2007. "Transportation Costs and International Trade in the Second Era of Globalization," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 131-154, Summer.
  9. Baier, Scott L. & Bergstrand, Jeffrey H., 2001. "The growth of world trade: tariffs, transport costs, and income similarity," Journal of International Economics, Elsevier, vol. 53(1), pages 1-27, February.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. New historical development papers on my desk
    by Robin in Cherokee Gothic on 2013-04-18 13:00:05
  2. Containerization and world trade
    by Economic Logician in Economic Logic on 2013-09-11 14:36:00
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Cited by:
  1. Stephen J. Redding & Matthew A. Turner, 2014. "Transportation Costs and the Spatial Organization of Economic Activity," CEP Discussion Papers dp1277, Centre for Economic Performance, LSE.
  2. Keith Head & Thierry Mayer, 2013. "What separates us? Sources of resistance to globalization," Canadian Journal of Economics, Canadian Economics Association, vol. 46(4), pages 1196-1231, November.
  3. Matthew O. Jackson & Stephen M. Nei, 2014. "Networks of Military Alliances, Wars, and International Trade," Papers 1405.6400, arXiv.org.

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