Impact of Ports on National Economy: Methodological Issues Impact of Ports on National Economy

Abstract

Economic and social benefits of the economy due to port activities and associated logistics are assessed by methods like input-output (I/O) model, autoregressive distributed lag (ARDL) model, structural equation model (SEM), gravity Model, value addition, etc. However, considering limitations of each such method, and lack of access to relevant data at regional and national levels showing impacts of Ports only, the paper attempts to find impact of port performances on national economy by correlations and regression analysis with emphasis on major ports of India.  Parametric tests covering narrow sub-class of possible cases have limitations to detect stationarity in time series data. Multiplier analysis assuming constant marginal propensity to consume (MPC) and no resource limitations may involve subjectivity to estimate direct, indirect and induced benefits. Economic impacts of ports by gross value addition are port specific and cannot be generalized. Multiple linear regression equations can better be fitted to the data to find empirical relationship of GDP with the chosen independent variables relating to performances of ports, logistics service providers and other service providers. Qualities of such regression equation need to be tested for linearity of error scores with zero mean and constant variance; significance of multiple correlation (  and relative importance of the selected independent variables. Proposed methods of  and  may avoid the bad leverage points and correlation issues.  It is recommended to go for robust multiple regression equation avoiding problems of bad leverage points and correlation issues.