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

Indra Degree Karimah, Muhammad Halley Yudhistira

Research output: Contribution to journalArticlepeer-review

10 Citations (Scopus)

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.

Original languageEnglish
Article number100180
JournalEconomics of Transportation
Volume23
DOIs
Publication statusPublished - Sept 2020

Keywords

  • Economic activity
  • Indonesia
  • Night light intensity
  • Panel data
  • Small port
  • Small-scale investment

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