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How Costly is Modern Maritime Piracy for the International Community?

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  • Bensassi, Sami
  • Martínez-Zarzoso, Inmaculada

Abstract

This paper focuses on the impact of maritime piracy on international trade. Piracy increases the cost of international maritime transport through an increase in insecurity regarding goods deliveries. Bilateral trade flows between the main European and Asian countries over the 1999 to 2008 period are used to estimate an augmented gravity model that includes various measures of piracy acts. We found robust evidence indicating that maritime piracy reduces the volume of trade; the effect of ten additional vessels hijacked being associated to an 11% decrease in exports. Using these results, the international cost of piracy in terms of trade destruction is estimated to be 28 billion dollars. Finally, we compare the cost of low intensity conflict like Somalia, to the cost of a full scale conflict (Afghanistan) and to the cost of an autarkic state (North Korea) for the international community in the year 2008.The results indicate that the cost of war more than doubles the cost of low intensity conflict.

Suggested Citation

  • Bensassi, Sami & Martínez-Zarzoso, Inmaculada, 2010. "How Costly is Modern Maritime Piracy for the International Community?," MPRA Paper 27134, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:27134
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    References listed on IDEAS

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    1. How Costly is Modern Maritime Piracy?
      by UDADISI in UDADISI on 2013-01-17 07:12:00

    Citations

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    Cited by:

    1. Alfredo Burlando & Anca D. Cristea & Logan M. Lee, 2015. "The Trade Consequences of Maritime Insecurity: Evidence from Somali Piracy," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 525-557, August.
    2. Alexander-Nikolai Sandkamp & Shuyao Yang, 2018. "Where Has the Rum Gone? Firms’ Choice of Transport Mode under the Threat of Maritime Piracy," ifo Working Paper Series 271, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    3. Paul Hallwood & Thomas J. Miceli, 2014. "Modern Maritime Piracy," Working papers 2014-01, University of Connecticut, Department of Economics.
    4. Flückiger, Matthias & Ludwig, Markus, 2015. "Economic shocks in the fisheries sector and maritime piracy," Journal of Development Economics, Elsevier, vol. 114(C), pages 107-125.
    5. Yoto V. Yotov, 2022. "Gravity at Sixty: The Workhorse Model of Trade," CESifo Working Paper Series 9584, CESifo.
    6. Inmaculada Mart�nez-Zarzoso & Sami Bensassi, 2013. "The Price Of Modern Maritime Piracy," Defence and Peace Economics, Taylor & Francis Journals, vol. 24(5), pages 397-418, October.
    7. Alexander Sandkamp & Vincent Stamer & Shuyao Yang, 2022. "Where has the rum gone? The impact of maritime piracy on trade and transport," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(3), pages 751-778, August.
    8. Kenneth S. Chan & Jean‐Pierre Laffargue, 2020. "Is piracy sustainable?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(1), pages 321-340, February.
    9. Julian Hinz & Elsa Leromain, 2016. "Politics of Global Value Chains," Working Papers 1026, Economic Research Forum, revised Jul 2016.
    10. Shepard, Jun U. & Pratson, Lincoln F., 2020. "Maritime piracy in the Strait of Hormuz and implications of energy export security," Energy Policy, Elsevier, vol. 140(C).
    11. Ercan Akan & Tunahan Gültekin & Sibel Bayar, 2022. "Statistical analysis of maritime piracy cases in world territorial waters," Journal of Transportation Security, Springer, vol. 15(3), pages 263-280, December.
    12. Obed B.C. Ndikom & Buhari Sodiq Olusegun, 2019. "The Presidential Order and Challenges of the Maritime Sector in Nigeria," International Journal of Science and Business, IJSAB International, vol. 3(4), pages 117-133.
    13. Olaf Jonkeren & Piet Rietveld, 2016. "Protection of Critical Waterborne Transport Infrastructures: An Economic Review," Transport Reviews, Taylor & Francis Journals, vol. 36(4), pages 437-453, July.
    14. Singh, C. & Bedi, A.S., 2012. "‘War on piracy’: the conflation of Somali piracy with terrorism in discourse, tactic and law," ISS Working Papers - General Series 543, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    15. Paul Hallwood & Thomas J. Miceli, 2013. "An Economic Analysis of Maritime Piracy and its Control," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(4), pages 343-359, September.

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    More about this item

    Keywords

    Piracy; International trade; Gravity equation; cost of conflict; security;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

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