Deep-water ports and international trade: A structural gravity estimation

Abstract

We investigate the importance of deep-water ports for international trade using a structural gravity model. To avoid confounding port depth effects with the well-known landlocked country penalty in international trade, we focus our inquiry on non-landlocked countries. Using ports data from year 2000 and trade data from 2000–2019, we find that countries with at least one port capable of hosting a Panamax ship (i.e., port depth of at least 41 ft) trade tremendously more manufactured goods than non-landlocked countries without such ports. Ten additional feet of maximum port depth corresponds with 18.3 to 19.8 percent more international trade in manufactured goods and 19.1 to 22.2 percent more trade in all commodities sectors for a non-landlocked country, while it is unrelated to trade in services. For trade in commodities, having more ports at deeper cutoff depths also corresponds with greater trade volumes.