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The Trade Consequences of Maritime Insecurity: Evidence from S omali Piracy
Author(s) -
Burlando Alfredo,
Cristea Anca D.,
Lee Logan M.
Publication year - 2015
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/roie.12183
Subject(s) - international trade , trade volume , economics , international economics , business
Abstract In the past decade (2000–2010), pirates from S omalia have carried out thousands of attacks on cargo ships sailing through the G ulf of A den and the I ndian O cean, causing what others have identified as significant damage to maritime trade. In this paper, we use variations in the spread and intensity of S omali piracy to estimate its effect on the volume of international trade. By comparing trade volume changes along shipping routes located in pirate waters to those that are not, we estimate that S omali piracy reduced bulk commodities trade passing through the G ulf of A den by 4.1% per year from 2000 to 2010. We find smaller reductions in total trade, consistent with the fact that not all goods are shipped by sea or are targets of pirate attacks. While our estimates suggest that the trade costs of piracy are much lower than what has been suggested in the existing literature, we find that they remain significant and unevenly distributed, with five countries and the EU shouldering 70% of the total costs.