Economic Impacts of Port

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INTRODUCTION

The aim of this report is to carry out a methodological review of port impact studies and their possible definitions. The aims and targets of impact studies, and the different methodologies used to deal with this issue, are classified and analyzed. The first studies on the economic impact of port activity emerged in the United States in the second half of the 1960s. The ports of New York and New Jersey were the first to be taken into consideration. In the 1970s, the first methodological discussions took place, based on the development of the input–output model and its application to the measurement of the impact of ports. The main stances opposing this kind of study were advocated by Robert C. Waters, while those in favour had Semoon Chang as their main champion, and most of Waters’ criticisms were dealt with.

1. PORT ECONOMIC IMPACTS

Ports contribute much to their economies, and port economic impact analysis is the major tool for documenting those contributions. The primary objective of port impact studies is to inform the public of the importance of port services, and additional benefits that may exist vary with particular studies. And also, the decision of local governmental agencies to construct port facilities is often preceded by a port economic impact study. The majority of existing port impact studies begin with definitions of port impacts, as an improper notion of port impact might well lead to an entirely wrong estimation of the total economic impact of a port. One of the major challenges in port impact studies is to identify the port-related industries and find out the degree of port dependency of these industries. Generally, economic impacts of port on the local economy can be divided into two way; primary or direct impact and secondary or indirect or induced impact.

2.1. Definition of the Primary Impact

Direct economic impact is the sum of the initial port-related spending by port authorities and their contractors, terminal operators, and other water transportation service providers. The primary impact typically includes all activity necessary for operation of the port facilities as well as those activities which rely directly on the use of the port facilities for shipping and receiving commodities. The specific economic activities included in the primary impact vary from study to study. In large part this variation is due, of course, to the fact that export and import activities differ markedly between geographic regions. However, it is also partially attributable to the lack of a commonly accepted definition of activities necessary for port operation. According to Davis (1983); some weaknesses in terms of defining the impact of a port in existing port studies, which are associated with the designation of economic activities to be included in the primary impact of a port. He argues that the primary impact typically includes all the activities necessary for the operation of port facilities, as well as those activities that directly rely on the use of the port facilities for shipping and receiving commodities. Because there exists no standard set of economic activities that comprise the primary impact of the port, some studies attempt to estimate the primary impact by surveying the “factors of community income directly generated by services to vessels and by port operations.” For this purpose, Brockel (1972) lists sixty-four factors directly generated by port operations and aggregates these factors into five categories, namely; vessel disbursement while in port (dockage, stevedoring, repairs, foodstuffs, hardware, etc.); port and terminal income (demurrage, handling, storage, etc.); inland transport (barge, rail, truck, local cartage, local switching); vessel crew expenditures (gift shopping, haberdashery, and clothing, transportation, etc.);and port services (banking, communications, commodity, brokerage, marine insurance, etc.) Similarly, Kaufmann (1979) sets out five...
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