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Economic Impacts of the blockage of the Suez Canal: an Analysis by IDE-GSM

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  • Gokan,Toshitaka
  • Kumagai,Satoru
  • Hayakawa,Kazunobu
  • Tsubota,Kenmei
  • Isono,Ikumo
  • Keola,Souknilanh
  • Kubo,Hiroya

Abstract

In this study, we attempted to identify the magnitude and geographical distribution of the negative and positive economic impacts of the blockage of the Suez Canal using a CGE model based on spatial economics with realistic geographical/logistic settings at the sub-national level. The estimated annual net negative impacts of the blockage totaled 79.6 billion USD for the world or 0.1% of the world’s GDP. However, positive impacts (211.9 billion USD) offset the significant negative impacts (291.5 billion USD). Among the countries, China is negatively affected most by the blockage of the Suez Canal in terms of value (-73.0 billion USD), followed by India (-26.2 billion USD) and Israel (-20.4 billion USD). EU also has a sizeable negative impact (-72.9 billion USD) collectively. However, some countries benefited from the blockage, such as the US (59.9 billion USD), Japan (32.0 billion USD), Brazil (20.0 billion USD) and Australia (18.2 billion USD). We effectively showed that the blockage of just one point in the sea route has a substantial adverse economic impact worldwide.

Suggested Citation

  • Gokan,Toshitaka & Kumagai,Satoru & Hayakawa,Kazunobu & Tsubota,Kenmei & Isono,Ikumo & Keola,Souknilanh & Kubo,Hiroya, 2024. "Economic Impacts of the blockage of the Suez Canal: an Analysis by IDE-GSM," IDE Discussion Papers 919, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper919
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    References listed on IDEAS

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    2. Gerritse, Michiel, 2021. "Does trade cause detrimental specialization in developing economies? Evidence from countries south of the Suez Canal," Journal of Development Economics, Elsevier, vol. 152(C).
    3. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    4. Kazunobu Hayakawa & Fukunari Kimura, 2015. "How Much Do Free Trade Agreements Reduce Impediments to Trade?," Open Economies Review, Springer, vol. 26(4), pages 711-729, September.
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    More about this item

    Keywords

    Suez Canal|IDE-GSM;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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