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Does small-scale port investment affect local economic activity? Evidence from small-port development in Indonesia

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  • Karimah, Indra Degree
  • Yudhistira, Muhammad Halley

Abstract

This study aims to find empirical evidence whether local feeder ports as small-scale investments in public infrastructure affect the economic activity at the sub-district level. The motivation for the study originated from the fact that the public invests heavily in small-scale projects when market failures occur. However, there is a lack of empirical studies on the impact of these investments because of data unavailability and their small marginal contribution at a more aggregated level. Using Difference-in-Differences that exploit staggered implementation of small-port operations, we found that the opening of small ports increased the night light intensity, a measure that captures local economic activity, by 1.8 per cent. Although the benefits reach beyond the sub-district where the port is situated, it takes more than two years to deliver its relatively small impact, and it might be not cost-effective.

Suggested Citation

  • Karimah, Indra Degree & Yudhistira, Muhammad Halley, 2020. "Does small-scale port investment affect local economic activity? Evidence from small-port development in Indonesia," Economics of Transportation, Elsevier, vol. 23(C).
    • Handle: RePEc:eee:ecotra:v:23:y:2020:i:c:s2212012219301509
    DOI: 10.1016/j.ecotra.2020.100180
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    1. Yudhistira, Muhammad Halley & Karimah, Indra Degree & Maghfira, Nadya Rahmi, 2022. "The effect of port development on coastal water quality: Evidence of eutrophication states in Indonesia," Ecological Economics, Elsevier, vol. 196(C).
    2. Sofiyandi, Yusuf & Kurniawan, Yusuf Reza & Yudhistira, Muhammad Halley, 2023. "The impact of maritime logistics subsidy on food prices: Evidence from Indonesia," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 1026-1045.
    3. Laima Gerlitz & Christopher Meyer, 2021. "Small and Medium-Sized Ports in the TEN-T Network and Nexus of Europe’s Twin Transition: The Way towards Sustainable and Digital Port Service Ecosystems," Sustainability, MDPI, vol. 13(8), pages 1-24, April.

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    More about this item

    Keywords

    Small port; Small-scale investment; Night light intensity; Economic activity; Indonesia; Panel data;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock

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