Port integration and regional economic development: Lessons from China

Port Integration (PI) -or port industry consolidation-is actively pursued in many countries around the world. It has been established that unfettered competition among ports in proximity leads to unnecessary duplication of effort and waste of scarce port resources. We adopt the Difference-in-Differences (DID) model to analyze the effect of PI on urban economic growth, as well as to identify the causes of spatial differences in urban development, possibly due to PI. We have analyzed datasets from 69 port cities in China, from 2000 to 2018. Our results show that PI can significantly advance the economic growth of port cities, and its effects increase with time. We also show that port integration has a clear positive effect on the economic growth of cities in the Yangtze River Delta region (YRD), particularly on small- and medium-sized cities. The economic effects of PI on cities in the Bohai Rim region (BR) and on big cities is, instead, insignificant. This result indicates the existence of strong spatial differences in the impacts of PI. Moreover, we show that PI has positive effects on the rationalization of port resources and their allocation among regional ports, promoting, in this way too, urban economic growth. In China, in particular, the country's port integration strategy has effectively driven the development of numerous ports, and it has successfully contributed to the development of the country's strong transportation network. Our findings provide useful guidelines to ports around the world, in their process of integrating and consolidating their port-, transport- and logistics sectors.