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The Trade Consequences of Maritime Insecurity: Evidence from Somali Piracy

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  • Alfredo Burlando
  • Anca D. Cristea
  • Logan M. Lee

Abstract

In the past decade (2000–2010), pirates from Somalia have carried out thousands of attacks on cargo ships sailing through the Gulf of Aden and the Indian Ocean, causing what others have identified as significant damage to maritime trade. In this paper, we use variations in the spread and intensity of Somali piracy to estimate its effect on the volume of international trade. By comparing trade volume changes along shipping routes located in pirate waters to those that are not, we estimate that Somali piracy reduced bulk commodities trade passing through the Gulf of Aden by 4.1% per year from 2000 to 2010. We find smaller reductions in total trade, consistent with the fact that not all goods are shipped by sea or are targets of pirate attacks. While our estimates suggest that the trade costs of piracy are much lower than what has been suggested in the existing literature, we find that they remain significant and unevenly distributed, with five countries and the EU shouldering 70% of the total costs.

Suggested Citation

  • Alfredo Burlando & Anca D. Cristea & Logan M. Lee, 2015. "The Trade Consequences of Maritime Insecurity: Evidence from Somali Piracy," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 525-557, August.
  • Handle: RePEc:bla:reviec:v:23:y:2015:i:3:p:525-557
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    File URL: http://hdl.handle.net/10.1111/roie.12183
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    References listed on IDEAS

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    Cited by:

    1. Vespe, Michele & Greidanus, Harm & Alvarez, Marlene Alvarez, 2015. "The declining impact of piracy on maritime transport in the Indian Ocean: Statistical analysis of 5-year vessel tracking data," Marine Policy, Elsevier, vol. 59(C), pages 9-15.

    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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