This paper studies the consequences of a U.S. cabotage law for Puerto Rico (PR). Data on ship arrivals in PR show that the fleet of U.S. vessels that call there lacks capacity for carrying non-containerized freight. Empirical estimation using trade data shows that PR’s imports of sea-shipped final products are biased against U.S. mainland sources. This bias is strongest for heavy products and products not typically shipped in containers. Among upstream products, a strong bias against imports of sea-shipped products applies to all sources. Estimated tariff-equivalent costs among final products imply static annual welfare losses of 1.1 percent of household consumption ($203 per person). The same tariff-equivalent cost estimates imply that the law raises the cost of investment in PR by 3.0 percent. The observed bias against sea-shipped inputs in PR’s imports may result from long-run industry location decisions that have been influenced by the law's presence.
Authors
- Citation
- “ Hillberry, Russell ; Jimenez, Manuel I. . 2024 . Economic Consequences of Cabotage Restrictions: The Effect of the Jones Act on Puerto Rico . Policy Research Working Paper; 10780 . © Washington, DC: World Bank . http://hdl.handle.net/10986/41572 License: CC BY 3.0 IGO . ”
- Collection(s)
- Policy Research Working Papers
- DOI
- http://dx.doi.org/10.1596/1813-9450-10780
- Identifier externaldocumentum
- 34322190
- Identifier internaldocumentum
- 34322190
- Published in
- United States of America
- Region country
- Puerto Rico
- RelationisPartofseries
- Policy Research Working Paper; 10780
- Report
- WPS10780
- Rights
- CC BY 3.0 IGO
- Rights Holder
- World Bank
- Rights URI
- https://creativecommons.org/licenses/by/3.0/igo/
- UNIT
- DECRG: Trade & Intl. Integration (DECTI)
- URI
- https://hdl.handle.net/10986/41572
- date disclosure
- 2024-05-21
- region administrative
- Latin America & Caribbean