What is the impact of port activities on the economic development its environment?

What is the impact of port activities on the economic development its environment?

(Word Count: 1994)

Today nearly 90% of merchandise trade is carried out by sea ( (Jung, 2011)). This figure gives an idea of the fundamental importance of harbors as actors of globalization. Ports are exchangeable through which many economic activities are performed. Ports have settled a key role in economic development since the 19th century, but it is in the 20th century that their role exploded. Currently, a port brings together logistical, industrial and, of course, economic activities. Their influence on world trade therefore seems obvious. Nevertheless, some elements seem to indicate that their impact on the economic development of their region seems limited. In a first step, we will study how ports are trying to influence their economic environment. Next, we will analyze whether the ports are efficiently shaping their close background.

From an economic and industrial perspective, the concept of port generally set of facilities designed and operated to ensure the transfer of goods between the vessel and the sea and the different means of land transport: rail, road, navigation interior, various pipes. The port activity itself requires a suitable logistical support, implying equipment needs and skills. It is thus a complex whole occupying a privileged place, not only in the region in which they develop, but also both nationally and internationally. Maritime transport and the port industry are now seen as essential vectors of development. We will analyze this impact by having a look at the way they are able to influence their close environment. The port impact seems best to be revealed through many observable variables. In this essay, we will use the following variables: employment, added value, and finance.

First, employment seems to be very high in port regions. Logically, economic development implies value creation and employment opportunities. In fact, many activities are grouped around ports such industrial plants (Foodstuff, Petroleum, Chemicals, Metals, Vehicles, Production of electricity), employees for the maintenance of the ports, for the transfer of goods, their transport, as well as persons in charge of logistics and port management. Thus, a port has evidently high needs for employees. For instance, the only port of Rotterdam employed over 93,000 persons in 2014 (Kuipers, 2015) mainly for transport (40%). Additionally, apart from the direct jobs created by the port, there are also indirect employment by the infrastructure. Thus, maritime trade provides direct and indirect employment within its territory. It also generates added value that contributes to the development of its economic environment. This employment is positive for the regional economy, as the inhabitants of the region can benefit from the globalization and the overall development of the ports. They can perceive the advantages of ports.

Furthermore, the ports have positive effect on the increase in value added of the region (Kuipers, 2015). According to Kuipers, the Region of Rotterdam accounts for 8.2% of the total Dutch economy with a stable growth rate of 1,9%. It is thus possible to observe that in the same way that ports influence the employment growth of a certain region, they also manage to participate in the creation of added value. Due to its economic activities (reception and sending of goods) and industrial activities (management of intermediate products until the creation of final products, intended for sale). he port is a major player in the economic development of a region. For example, according to the Port of Montreal, port activities in Montreal create more than 16,000 direct and indirect jobs, and generate annual economic spinoffs of about $ 2.1 billion (Port de Montréal, 2015). Its location 1,600 kilometers (1,000 miles) inland, the versatility of its facilities and its privileged access to rail and road transportation networks, serves Quebec and North America (Port de Montréal, 2015). Serving a pool of 40 million consumers in one day of trucking and 70 million consumers in less than two days by train, the Port of Montreal is an important link in the supply chain of Canadian and US industries and businesses (Port de Montréal, 2015). Here, the port is an example of economic developments, as it allows trades from North America to the rest of the world. Such an economic development would be impossible without the existence of such a network.

Moreover, another positive influence portal activities have on the economic development of a region is its need for capital. In fact, for a port to work properly, they need massive investments (Rodrigue, s.d.). One might think those investments will only benefit the port and the companies with activities related to the port.  However, the economic benefits of the investments are very large. In fact, when an investment is made, it can allow job creation in obvious ways, but investors bring much more than employment: they bring wealth. Indeed, a port receiving a lot of investment will benefit from very good infrastructures (neighborhoods, railways, airports) whose inhabitants will also benefit (Rodrigue, s.d.). In addition, capital investments add value to the port. Thus, the land on which the port is implanted will take value which is positive for the region. Also, when an investment is made, the state imposes a tax on the amount. This contributes to national enrichment, and thus the creation of infrastructure and services that every citizen will benefit from (Rodrigue, s.d.). A very simple example is that of Erasmus University: the development of this university is partly due to the economic benefits of the port.

Thus, in this first part we have proved that the activities of the ports have a positive impact on the economic development of the region where the port is located.

Although the ports act as an economic platform, whose economic benefits accrue to many people, the positive correlation between the development of a port and that of its region is not obvious. While it might seem obvious for many people, many reasons lead to think the opposite, and we will try to address those points in the following part. First, we will analyze the link between a city and its port, with the example of Rotterdam. Then we will study how the ports negatively impact the region in which they are located.

Kuipers succeeded, thanks to its research carried out in 2015 to demonstrate that the link between the development of the port and that of its region is not obvious. The city of Rotterdam recorded a turnover of 36.3 billion euros in 2008, while the port has only created 15.2 billion of turnover, which is only half of its agglomeration. Thus, the port may not be as much a player in the local economy as we presumed earlier. Indeed, according to Kuipers (2015), the economic links between the port and the city of Rotterdam are very weak. The city of Rotterdam 3.6 billion euro at the port, 5% of the total output of the urban economy, while the port only provides 2.2 billion euro to the city, 3% of the total production of the port economy (Kuipers, 2015). This is explained by the fact that the port of Rotterdam is strongly oriented towards international trade, and bases its business on the import and export of goods to the rest of the world. On the other hand, the city of Rotterdam occupies a central place in the Dutch national economy (Kuipers, 2015). Nevertheless, the link between the city and the port becomes more and more important, and could become unavoidable in the future.

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