Scandinavian Working Papers in Economics
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Department of Economics, Lund University Working Papers, Department of Economics, Lund University

No 2013:4:
Estimating the Effects of the Container Revolution on World Trade

Daniel M. Bernhofen (), Zouheir El-Sahli () and Richard Kneller ()

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; (follow links to similar papers)

JEL-Codes: F13; (follow links to similar papers)

34 pages, February 15, 2013

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This paper is published as:
Bernhofen, Daniel M., Zouheir El-Sahli and Richard Kneller, (2016), 'Estimating the Effects of the Container Revolution on World Trade', Journal of International Economics, Vol. 98, pages 36-50

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