The impacts of maritime piracy on global economic development: the case of Somalia

This paper investigates the impacts of maritime piracy on global economic development. Calibrated with data between 2003 and 2008, we model shipping demands and competition in the Far East-Europe container liner shipping service and investigate the economic welfare loss effects due to reduced volumes of trade and shipping, as well as efficiency loss due to geographical re-routing of shipping networks which would be otherwise uneconomical. The substantial economic loss simulated from our model indicates that, even from purely the perspective of economic interests, more efforts from the international community should be dedicated to tackle maritime piracy.

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