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Local content requirements and their economic effect on shipbuilding: A quantitative assessment

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  • Karin Gourdon
  • Joaquim Guilhoto

Abstract

This study quantifies the significant economic gains that are expected to be revealed through the abolition or relaxation of local content based policies. The work analyses two specific local content policies affecting directly or indirectly the shipbuilding industry in two countries: Brazil’s local content requirement as part of national concession contracts in the oil and gas sector, and the long-standing US Jones Act obliging intra-US seaborne trade to be conducted on US built and US flagged vessels. The paper’s static simulation exploits OECD’s latest Trade-in-Value-Added (TiVA) data – a rich database on Inter-Country Input-Output relationships. The database has been disaggregated to the level of the shipbuilding industry, enabling an assessment of the effect of the two selected policies on inter-industry trade. The simulation results suggest large economic benefits for both countries in the long-term despite initial losses in the target industry.

Suggested Citation

  • Karin Gourdon & Joaquim Guilhoto, 2019. "Local content requirements and their economic effect on shipbuilding: A quantitative assessment," OECD Science, Technology and Industry Policy Papers 69, OECD Publishing.
    • Handle: RePEc:oec:stiaac:69-en
    DOI: 10.1787/90316781-en
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    More about this item

    Keywords

    input-output models; international trade; Local content requirements; shipbuilding; trade restrictions;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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