The Role of Technical Efficiency & Productivity Evolution in Port Development: An application to Caribbean small island developing states (SIDS) ports

Julien Brown, Shelly-Ann

Abstract

Economic growth has continually remained an objective of every nation, particularly for lesser-developed countries such as the Small Island Developing States (SIDS). According to an UNCTAD (2014) report on “Small island developing States: Challenges in transport and trade logistics,” one way of attaining economic growth is by focusing attention on tackling the challenges faced by transport and trade logistics (UNCTAD, 2014).
Given the unique characteristics of SIDS nations, notably high import content, insularity, geographic remoteness and small economies, populations and areas, all of these factors emphasize the importance of having “well-functioning, reliable, sustainable and resilient transportation systems, in particularly the maritime sector for SIDS development and international trade survival” (UNCTAD, 2014).
Such policies would be consistent with what is generally referred to as ‘supply led’ economic development, where improvements in transport related infrastructure result in economic growth (Cowie, 2010). Such an approach assumes there is a latent demand for a country/region’s produce, but this is being prevented from being exploited, because of inefficiencies in, or a lack of adequate port infrastructures and human resources.
These challenges constitute a key policy concern for the sustainable development of SIDS’ ports and become not only a port concern but a national concern, as directing adequate funding to improving port efficiency, has become a top priority (UNCTAD 2014). For instance, according to the United Nations (UN), “benchmarks need to be established to monitor and improve port performance…”(UNCTAD, 2014), while SIDS such as the Caribbean Community (CARICOM) aim to improve their maritime sector, claims that “…enhancing the maritime sector has the potential to fuel CARICOMs trade, increase port productivity and generate significant cost savings…” (CARICOM, 2013).
This research aims to measure, analyse and compare port efficiency and productivity over a ten-year period (2001-2011), on 69 seaports, using non- parametric DEA based tests. The primary focus is on the Caribbean SIDS (referred as the Caribbean for abbreviation purposes), benchmarked against top ports. This is investigated from the realm of how port policy and development strategies have affected efficiency and productivity over time. This research attempts to present greater insight into SIDS ports, with reference mainly to the Caribbean, whilst the approach can become a springboard, implemented on other port types and regions of the world. Additionally, its practical contribution may become a better guide for international (UNCTAD), regional (CARICOM) and country level decision makers.
Evolutionary technical efficiency and productivity for the Caribbean’s Small Island Developing States (SIDS) ports, during the period 2001-2011 are evaluated. Moreover, the region’s port development initiatives are assessed over the same period. Top ports received an average efficiency of 72%, outperforming the overall 66% average for Caribbean ports as was expected. Interestingly enough, efficiencies for top ports decreased on average by 0.5% per annum over the decade, whilst increases of up to 0.7% were found for Caribbean ports. Moreover, the region’s productivity grew by 3.2%, compared to their larger top counterparts, of up to 2% per annum.
This research concludes that trade volumes play an integral part in affecting efficiency and productivity. Additionally, given port development initiatives, the Caribbean’s progresses in efficiency/productivity has been mainly the effects of scale and technical progress respectively. Since these ports are usually smaller scale and yield lesser throughput (compared to their larger counterparts), when they begin to grow, the focus is on enlarging their production scales, however, this is at the expense of adjusting internal practises.
Compared to TOP ports, increases in productivity is solely the consequence of technical progress. Since these are usually larger scale ports and so likely yield more throughput, will likely be operating at the size of decreasing returns to scale. This suggests, that they are not properly focusing on internal practices and sizing their production scales to accommodate the rise in technical progress.
The research findings can potentially influence decisions made by local and regional authorities in the Caribbean, when it comes to port development initiatives, as it provides an overview of efficiency/productivity, but more so that which impedes these progresses.

Citation

Julien Brown, S. The Role of Technical Efficiency & Productivity Evolution in Port Development: An application to Caribbean small island developing states (SIDS) ports. (Thesis). Edinburgh Napier University. Retrieved from http://researchrepository.napier.ac.uk/Output/1255373

• Thesis Type: Thesis
• Deposit Date: Jul 24, 2018
• Publicly Available Date: Jul 24, 2018
• Keywords: Small Island, Caribbean, Port Development,
• Public URL: http://researchrepository.napier.ac.uk/Output/1255373
• Award Date: Jun 27, 2018