The Role Of Transport In Economic Development – Every country’s economy depends on many sectors to function smoothly and without significant obstacles. And one of the most important sectors for the economy is transportation.

Transport and logistics play an important role in economic growth, one of the most relevant macroeconomic measures. But before we continue to learn the details of how transportation and logistics affect a country’s economy, let’s understand what transportation economics means.

The Role Of Transport In Economic Development

A simple definition of transport economics states that it is the branch of economics that studies the allocation of resources to the transport sector and infrastructure to meet the needs of society. By implementing transport economics, countries can develop more efficient transport systems to promote economic development.

Pdf] Evaluating Transportation Economic Development Impacts Understanding How Transport Policy And Planning Decisions Affect Employment, Incomes, Productivity, Competitiveness, Property Values And Tax Revenues

In other words, the primary role of transport as a part of any economy is to provide and improve the access of people and organizations to various places within or outside the country while facilitating a wide range of social and economic interactions that otherwise No type. possible

In transportation economics, demand is a particularly important measure that can be tracked by various means, such as the total number of trips, or the total distance traveled, which is usually measured separately for public and private transportation systems. By understanding your demand and load, countries can adapt their transport facilities, transport investments, transport costs and various infrastructure and transport projects within a country or as a network to the rest of the world.

Transportation is essential to the global or any local economy because an efficient transportation system promotes personal development of people and business growth. Without a functioning transportation system, it is difficult for people to go to school and work places.

Also, it becomes difficult for businesses to access supplies and provide complete products to consumers.

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To better illustrate the importance of transportation activities, we can take some statistics. For example, at the turn of the 20th century, transportation represented 17 to 18 percent of the United States’ gross national product (GNP).

Transport today represents around 5% of the gross domestic product (GDP) of EU member states. Other countries such as New Zealand report similar numbers.

According to the European Commission’s Science and Knowledge Service, 10 to 15 percent of the cost of finished products for European manufacturers comes from logistics, which includes transportation and storage. Also, 13.2% of each household’s budget is spent on transportation goods and services on average. Transport activities have a significant impact on economic activities.

To understand how the economic development of a country can be affected by the transport infrastructure. It is important to clarify that transport is related to both the macro economy and the micro economy.

Unit 1 Introduction To Transport Economics

This means that a country’s transport capacity will affect various aspects that are part of its economic development. Let’s take a closer look at some of them.

Continuing the example of the United States, the most important part of transportation in the country is the use of highways.

This sector receives more than a quarter of the expenditure on both personal and freight intercity transport, which represents a larger amount than that reached by railway transport, even before the First World War when it saw its golden age.

Although car ownership is not as high as in other countries of the world, it illustrates that the need to move people and goods is an essential aspect of any society’s economic activity.

Pdf) The Role Of The Transport System In Stimulating Economic And Social Development

Therefore, investment in any form of transportation will contribute to economic development regardless of how high the costs are.

The most important aspects of economic growth affected by transport activities are communication and trade. Transport infrastructure investment aims to create the most efficient transport network for both the country and the local economy. Any government seeking better access to trade markets and stimulating economic growth needs an extensive network to improve transport performance and logistics.

Governments build roads and other transportation infrastructure to ensure that their social, political and business ties are strong within and outside the country. Without them, business transactions would not be possible. Can you imagine companies like Sony, Samsung or Apple without the possibility of exporting their products?

Will their countries Japan, Korea and the United States have the same economic power? Obviously not. Therefore, the communication and trade facilitation with the transport system should include various transport services. But, what are these services?

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The minimum services for passenger and freight transport that should be included in any transport system to facilitate communication and trade are:

The battle for economic dominance sees different countries using different economic factors to their advantage. And transportation is one of them. Transportation services, related infrastructure, and logistics can benefit other countries in international markets. For example, the UK has a long coastline which is likely to represent an advantage for landlocked countries with ships coming and going from their ports.

Likewise, the expansion of coastlines and the capacity of ports and airports in the United States makes them stronger when it comes to transportation and logistics to cover the global demand for products produced by American companies. Another important aspect of having better transportation is that it helps reduce costs associated with products, thus resulting in price competition.

Over time, transportation activity has been linked to the possibilities of developing land and other resources. It was one of the most important factors for the growth of agricultural production, although it also turned transportation into the biggest enemy of the environment in the opinion of many.

Unit 2 Transport And Economic Development

With the possibility of land expansion, the population can also grow, and with it, the demand in markets for increased production. More production also means more freight moving around and more demand for vehicles to transport those goods. And so, the snowball continues to grow, resulting in unwanted effects on the environment.

It is well known that transport is mainly dependent on fuel sources which lead to harmful CO2 emissions. Fortunately, almost every government in the world has now committed to improving infrastructure and logistics to reach net zero in the coming years.

What’s more, with the growing demand for private and public transportation, another issue arises, that of traffic congestion. The University of California Transportation Center has conducted extensive research on reducing traffic congestion. Controlling ongoing traffic and improving transportation infrastructure can also have a significant impact on the environment.

Economic growth and economic productivity require human interaction. Ultimately, it’s the people who make commerce possible. But, this growth also means population growth and a higher demand for transportation alternatives for people to get from their homes to schools and workplaces.

Sustainable Transport, Poverty Eradication, Livelihoods And Economic Recovery

Also, transportation has helped move human interactions on a global scale. The fact that air travel allows us to reach the other side of the planet in a single day makes it possible to see global trade and cultural exchange. Therefore, the demand for passenger transportation increases, resulting in more opportunities for business and economic development.

The demand for efficient transportation is not limited to people moving around the city or in the country. Logistics is an area of ​​economic activity that greatly benefits from having the best possible transportation system. Governments can control the expansion of their transportation system to achieve economic growth. There are two ways to do this.

Here, investment is made in general growth. As a result, consumers are demanding more and better transportation alternatives. Control here is limited because governments must react to the demand that emerges, which usually results in poor solutions.

This is a more controlled option for development because overall growth comes from investment in transport networks and infrastructure which boosts productivity and creates more demand for these new and better products. Preparing solutions in advance allows for better planning and better predictions about possible outcomes.

The Impact Of Transport Economy

Governments must be careful about the environmental impact of their decisions on transportation solutions. The current demand for emission reduction and pollution control should not be ignored.

However, technology is improving and transportation investments are being allocated to transportation alternatives, including air transportation. Such new technologies aim to sustain global economic activity while meeting the demand for goods from an ever-growing population. Let’s be a good one for the future of transportation.

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