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The economic rationale of a deep-water port and the Brazil road link

The economic rationale of a deep-water port and the Brazil road link

first_imgThe idea of a deep-water port and a road linking Brazil and Guyana is nothing new. The conceptualisation of this initiative was developed and publicly discussed a long time ago. Hypothetically, these are indeed good developmental initiatives to transform the economic development of any small developing nation, like Guyana.That said, it would appear that the Government of Guyana is making a concerted effort to have these initiatives materialised, which is nothing short of commendable against the backdrop of how these developments could both transform and aid in diversification of the Guyanese economy in the longer term.With approximately 80 per cent of the world’s trade in merchandise being carried by ships, maritime transport remains by far the most common mode of international freight and transport. It is the backbone of facilitating international trade, offering the most economical and reliable method to move goods over long distances. Ships can carry large volumes of merchandise, and use free highways in the seas, which only requires infrastructure developments at the seaports. In Guyana’s case, we may have to build new seaports in addition to implementing infrastructure developments at existing seaports. The performance of ports is an essential element of overall trade costs for all countries (AfricanBank Development Report, 2010).Against this background, it is widely recognised that an efficient transport system, one that facilitates the economical movement of goods, resources and people, is vital for economic growth and, by extension, globalisation. In a historical context, during the 19th century, improvements in transport and communications were major contributors to the expansion of world trade and globalisation. Communications continued to be revolutionised in the 20th century with innovations such as cars, aeroplanes, large bulk carriers, container ships and pipelines for oil and gas.The introduction of railways and improvements in road infrastructure caused land transport costs to fall by 90 per cent from 1800 to 1910; the real cost of ocean shipping fell by 80 per cent between 1750 and 1990; and by 1980, the real cost of air freight had fallen by approximately 75 per cent from its level in the 1930s. The increased participation of developing countries in world trade “would not be possible without global shipping networks, port reforms, and investments in transport infrastructure as well as trade and transport facilitation”, according to UNCTAD. Moreover, there exists “a virtuous cycle where better transport services lead to more trade, and more trade helps to encourage improved transport services”. By the beginning of the 21st century, the ‘tyranny of distance’, while perhaps not completely tamed, was greatly diminished (Tull, 2006).Economic impacts of deep-water ports in advanced economiesConnecticutThe operation of Connecticut seaports directly and indirectly accounted for 2 per cent of the State’s employment and 2.6 per cent of the State’s total output in 1997. It also contributed about 2.5 per cent of that State’s taxes. The ports significantly reduced truck traffic, and thus directly improved their environment. The relative cost to Connecticut’s metal working industry of steel delivery by truck versus ship: A ship carrying 26,000 tons of steel crosses the Atlantic in seven days at a daily rate of US $12,000. A truck carrying 20 tons of steel from Burns Harbor, Indiana makes the 900-mile trip to Connecticut in 1.4 (12-hour) days at $60 per hour. The 1,300 truck trips cost Connecticut’s steel users US$1.3 million versus US$84,000 for the same quality by ship.ConclusionEach year, ports and waterways carry more than 2 billion tons of cargo. Not only are ports crucial for the exportation and importation of goods for international trade, but also for transporting of goods domestically. Another major economic benefit that ports provide to countries is the creation and maintenance of jobs.Though space precludes a more comprehensive review of empirical studies of how seaports, or deep-water ports in particular, contribute to the economic development of countries around the world, much evidence exists, nonetheless, to corroborate and/or validate the notion that deep-water ports do aid in delivering massive positive economic spinoffs to countries. It is therefore against this backdrop that the road linking Guyana and Brazil, together with the deep-water port project, could significantly transform Guyana’s economy in terms of job creation, reduction of poverty for its citizens, more revenue in the form of taxes for the Government, better quality of life and standard of living to its people, the creation of new industries and new businesses and economic opportunities, and the list goes on.Hypothetically, depending on the location where the port might be developed, when one looks at the geographic position of Guyana on the South American map, literally kissing the Atlantic Ocean, one cannot help wondering whether Guyana could become the gateway to facilitate the transport of goods from other South American countries through Brazil and a deep-water port. If such an idea is proved to be possible and economical, then one can only imagine the sea of economic prosperity which these developments could potentially bring to Guyana.last_img read more