Economic Development and Logistics Performance. A Probabilistic Approach

Abstract

There is not a consensus about a complete set of explanatory variables that could ultimately explain the linkages behind achieving economic development. In spite of this, determinants of economic development and especially the linkages between economic development and logistics performance are topics of growing interest within the recent literature, both in economic growth theory and maritime studies.In this paper our attention is focused on the importance of logistics performance as one of the explanatory variables for economic development. To this end, we have estimated different econometric models in an attempt to explain the probability of a country being economically developed, based on a number of traditional explanatory variables (including natural endowments, economic openness, and institutional framework, among others) along with logistics performance as the major theoretical innovation. The applied methodology follows the binary choice framework described in probit models.In the next step the research is concentrated on the determination of possible endogenous causalities of the economic development. In the last section we estimate the logistics gap, measured as a probability of reaching economic development that varies due to differences in the levels of logistics performance.Our main finding shows that logistics performance is closely related to the probability of a country being developed. Specifically, the probability of being a developed country increases when logistics performance is improved.