Estimating the Effects of the Container Revolution on World Trade

34 Pages Posted: 8 Mar 2013

See all articles by Daniel M. Bernhofen

Daniel M. Bernhofen

American University - School of International Service; American University; American University - School of International Service

Zouheir El-Sahli

Lund University

Richard Kneller

University of Nottingham

Date Written: February 28, 2013

Abstract

The introduction of containerization triggered complementary technological and organizational changes that revolutionized global freight transport. Despite numerous claims about the importance of containerization in stimulating international trade, econometric estimates on the effects of containerization on trade appear to be missing. Our paper fills this gap in the literature. Our key idea is to exploit time and cross-sectional variation in countries’ adoption of port or railway container facilities to construct a time-varying bilateral technology variable and estimate its effect on explaining variations in bilateral product level trade flows in a large panel for the period 1962-1990. Our estimates suggest that containerization did not only stimulate trade in containerizable products (like auto parts) but also had complementary effects on non-containerizables (like automobiles). As expected, we find larger effects on North-North trade than on North-South or South-South trade and much smaller effects when ignoring railway containerization. Regarding North-North trade, the cumulative average treatment effects of containerization over a 20 year time period amount to about 700%, can be interpreted as causal, and are much larger than the effects of free trade agreements or the GATT. In a nutshell, we provide the first econometric evidence for containerization to be a driver of 20th century economic globalization.

Keywords: containerization, 20th century global transportation infrastructure

JEL Classification: F130

Suggested Citation

Bernhofen, Daniel M. and El-Sahli, Zouheir and Kneller, Richard, Estimating the Effects of the Container Revolution on World Trade (February 28, 2013). CESifo Working Paper Series No. 4136. Available at SSRN: https://ssrn.com/abstract=2228625

Daniel M. Bernhofen (Contact Author)

American University - School of International Service ( email )

4400 Massachusetts Ave, NW
Washington, DC 20016
United States
2028856721 (Phone)

American University ( email )

4400 Massachusetts Av NW
Washington, DC 20015
United States
202-885-6721 (Phone)

HOME PAGE: http://www.american.edu/sis/faculty/dbernhof.cfm

American University - School of International Service ( email )

4400 Massachusetts Ave, NW
Washington, DC 20016
United States
2028856721 (Phone)

Zouheir El-Sahli

Lund University ( email )

Box 117
Lund, S221 00
Sweden

Richard Kneller

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

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