Econometric Evidence of Catalytic Effect of Seaport Activity in OECD Countries: Getting It Right

Abstract

Within the transportation sector, ships and seaports constitute a significant portion. During the last decade, there has been a rise in the containerization era. This paper quantifies the relationship between seaport activity and GDP per capita while addressing Cross-sectional Dependence and slope heterogeneity issues in 28 OECD countries from 2000 to 2019. Suitable proxies for economic development and seaport activity are subjected to panel data analysis. Cross-Sectionally Augmented Autoregressive Distributed Lag is used, and Common Correlated Effects Mean Group and Augmented Mean Group are employed for the Robustness check. Seaport activity has a positive long-term relationship with income per capita. Country-specific effects are also used to highlight the relative strength of the relationship across sample countries. Panel Granger causality shows the feedback effect between seaport activity and GDP per capita. Causality is also investigated using the Dumitrescu-Hurlin causality test, which is suitable for heterogeneous panels in the presence of cross-sectional dependence. Recommendations include the lessons for carefully appraised investments and standardization of operations in the seaport industry in OECD countries.