OECD Science, Technology and Industry Policy Papers

The OECD Directorate for Science, Technology and Innovation (STI) develops evidence-based policy advice on the contribution of science, technology and industry to well-being and economic growth. STI Policy Papers cover a broad range of topics, including industry and globalisation, innovation and entrepreneurship, scientific R&D and emerging technologies. These reports are officially declassified by an OECD Committee.


Local content requirements and their economic effect on shipbuilding

A quantitative assessment

This study quantifies the significant economic gains that are expected to be revealed through the abolition or relaxation of local content based policies. The work analyses two specific local content policies affecting directly or indirectly the shipbuilding industry in two countries: Brazil’s local content requirement as part of national concession contracts in the oil and gas sector, and the long-standing US Jones Act obliging intra-US seaborne trade to be conducted on US built and US flagged vessels. The paper’s static simulation exploits OECD’s latest Trade-in-Value-Added (TiVA) data – a rich database on Inter-Country Input-Output relationships. The database has been disaggregated to the level of the shipbuilding industry, enabling an assessment of the effect of the two selected policies on inter-industry trade. The simulation results suggest large economic benefits for both countries in the long-term despite initial losses in the target industry.


Keywords: trade restrictions, shipbuilding, international trade, Local content requirements, input-output models
JEL: R15: Urban, Rural, Regional, Real Estate, and Transportation Economics / General Regional Economics / General Regional Economics: Econometric and Input-Output Models; Other Models; C67: Mathematical and Quantitative Methods / Mathematical Methods; Programming Models; Mathematical and Simulation Modeling / Input-Output Models; F10: International Economics / Trade / Trade: General
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