Working Paper No. 10-11
Understanding the Root Causes of Modern Maritime Piracy
This paper examines the trends and determinants of modern-era piracy. To that end, it first applies the extralegal appropriation and production model to contemporary maritime piracy. It, then, 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 these data with macroeconomic and aggregate measures on per-capita incomes, rates of economic growth, unemployment rate and institutional quality of countries where piracy incidents occur. I find the results well support the model in that economic and political factors do matter: higher real incomes per capita, lower unemployment rates and more political freedoms influence the number of pirates involved in incidents, the success of attack and property damage inflicted.