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

Indra Degree Karimah and Muhammad Yudhistira

Economics of Transportation, 2020, vol. 23, issue C

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.

Keywords: Small port; Small-scale investment; Night light intensity; Economic activity; Indonesia; Panel data (search for similar items in EconPapers)
JEL-codes: O18 R42 R53 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.ecotra.2020.100180

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