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Impact of the Panama Canal expansion on the Panamanian economy

Author

Listed:
  • Anthony M. Pagano
  • Miles K. Light
  • Onésimo V. Sánchez
  • Ricardo Ungo
  • Eddie Tapiero

Abstract

The Panama Canal is currently in the process of a major expansion effort. After the new set of locks is opened in 2014, significantly larger ships can traverse the canal. This paper examines the economic impact of the canal expansion on the economy of Panama. The analysis is performed through an Input--Output (IO) model. The analysis is further developed through the use of a computational general equilibrium model that allows the exploration of the interactions of different variables using a second set of data for 2008. The results are then calibrated with variables produced by the 2006 IO model. A gravity model formulation is then used to estimate the economies of agglomeration and network effects that result from the canal on the Panama Canal Trade in Logistics Services Cluster. The implications of the study are significant for the canal, the government and country itself. Just as any business needs to estimate its return on investment to align its budget, Panama needs to understand the economic impact of the canal expansion. In addition, the results of the research can be very useful for developing countries interested in estimating the impact of their ports and maritime industry on growth and development in the future.

Suggested Citation

  • Anthony M. Pagano & Miles K. Light & Onésimo V. Sánchez & Ricardo Ungo & Eddie Tapiero, 2012. "Impact of the Panama Canal expansion on the Panamanian economy," Maritime Policy & Management, Taylor & Francis Journals, vol. 39(7), pages 705-722, December.
    • Handle: RePEc:taf:marpmg:v:39:y:2012:i:7:p:705-722
    DOI: 10.1080/03088839.2012.729273
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    1. Anonymous, 1966. "Economic and Social Council," International Organization, Cambridge University Press, vol. 20(3), pages 634-645, July.
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    Cited by:

    1. Anthony Pagano & Grace Wang & Onésimo Sánchez & Ricardo Ungo & Eddie Tapiero, 2016. "The impact of the Panama Canal expansion on Panama’s maritime cluster," Maritime Policy & Management, Taylor & Francis Journals, vol. 43(2), pages 164-178, February.
    2. Chen, Jihong & Wan, Zheng & Zhang, Fangwei & Park, Nam-kyu & Zheng, Aibing & Zhao, Jun, 2018. "Evaluation and comparison of the development performances of typical free trade port zones in China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 118(C), pages 506-526.
    3. Dimitrios Folinas & Naoum Tsolakis & Dimitrios Aidonis, 2018. "Logistics Services Sector and Economic Recession in Greece: Challenges and Opportunities," Logistics, MDPI, vol. 2(3), pages 1-16, August.
    4. Medina, Jorge & Kim, Jong-Ho & Lee, EunSu, 2020. "A preliminary analysis of U.S. import volumes and regional effects associated with the Panama Canal expansion," Research in Transportation Economics, Elsevier, vol. 84(C).
    5. Dong Yang & Ghim Ping Ong & Anthony Theng Heng Chin, 2014. "An exploratory study on the effect of trade data aggregation on international freight mode choice," Maritime Policy & Management, Taylor & Francis Journals, vol. 41(3), pages 212-223, May.
    6. Wenming Shi & Hee-Seok Bang & Kevin X. Li, 2016. "A cross-region analysis of the output elasticity of transport investment in China," Maritime Policy & Management, Taylor & Francis Journals, vol. 43(2), pages 222-241, February.
    7. Jihong Chen & Theo Notteboom & Xiang Liu & Hang Yu & Nikitas Nikitakos & Chen Yang, 2019. "The Nicaragua Canal: potential impact on international shipping and its attendant challenges," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 21(1), pages 79-98, March.

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