Port's Economic Impact On The Economy

The relationship between the economic impact of a port and its surrounding economy can be interpreted by two opposite views. It is like the saying ¨who came first, the chicken or the egg? Some believe that the city developed around the port and the opposing view is that the port developed as a result of a city. Shan 2014 has a more equal outlook on it saying that a port city functions as both a port and a city, meaning that the port and its host city equally depend on each other. The first view is that ports are the main engines of growth for an economy, that they provide only positive impacts to the region in which it is located.

Many past studies have claimed that port activities contribute to the economy of the port city in many ways such

Yochum Agarwall 1987, 1988 set out some guidelines for analysing a port’s economic impact. These guidelines show us the different types of employment that ports provide to its economy. They can be classified into three different parts: port required industry, port attracted industry and port induced industry. The port required industry consists of those employed in firms providing services to the movement of waterborne commerce such as transportation services and port services. Port attracted industry refers to those employed in firms attracted to the region because of the presence of the port. The port induced industry refers to those employed in firms that have expanding their markets by exporting through the port. A similar way of classifying the economic impact of ports is the Dutch functional approach, which classifies them into either direct economic effects, backward linkages or forward linkages. (Bossche van den 1997). Without the existence of a port in a region, a lot of these forms of employment would not be available for the people of the area. Therefore, these approaches make it clear to us that a port is economically beneficial to its

However, more recently there is more evidence that the local region of the port isn’t gaining as much benefits as the national or even international region. This is discussed in (Bencacchio, Heralambides, Ferrari and Musso’s 2000) paper on the economic impact of ports. where they use a territorial cost-benefit analysis to look into the changes of a port’s production function. The economic impact of ports is compared with the costs suffered by the local economies. This analysis is a good measurement because unlike most other studies it outlines the benefits but also takes into consideration the costs that result from these benefits. Most of the benefits that they find however are those gained by the national region rather the local region. The next section of this paper will be based mostly on the impact of the port of Castellon on just the local