Date of Award

Spring 1-1-2011

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

First Advisor

Murat Iyigun

Second Advisor

Charles de Bartolomé

Third Advisor

Jonathan Hughes

Abstract

This dissertation is composed of three studies on the root causes and determinants of modern maritime piracy. The first chapter discusses the root and proximate causes of modern maritime piracy. It then presents a theoretical model of extralegal appropriation and production applied to maritime piracy. The model shows that (1) the lack of economic opportunities stimulates piracy by lowering its opportunity cost, (2) weak states raise the return to piracy due to a lack of protection of property rights in those states, and (3) the existence of piracy and its effectiveness impact the maritime trade. The second chapter empirically examines the trends and determinants of modern-era piracy. It utilizes a new dataset of 3,362 maritime piracy incidents that occurred worldwide between 1998 and 2007. To test model predictions, the data cover detailed information on the location, timing, the number of pirates involved, the ship's characteristics and success of each attack, as well as the material damage and violence inflicted upon the crew and the cargo. I combine this data with macroeconomic variables and the institutional quality of countries where piracy incidents occurred. I find the results strongly support the model in that economic and political factors do matter with the number of pirates involved in incidents, the success of attack and the property damage imposed. I also find that piracy incidents affect the regional maritime trade volume. The third chapter (coauthored with Murat Iyigun, my primary dissertation advisor) empirically focuses on the evolution of piracy attacks over time due to learning-by-doing and skill accumulation. We find that economic factors and the law do matter: higher per-capita incomes as well as more effective legal and political institutions dampen both the physical violence and material damage of modern-day piracy. But we also document significant learning-by-doing and skill accumulation among the pirates: a history of successful piracy attacks locally improves the odds of success, making it more likely that pirates inflict more violence on the crew and take control of vessels in their entirety. The learning-by-doing effects are detectable even after controlling for our proxies for capital use and labor input.

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