The Role of Transport in Economic Development
by Sinethemba Mngqibisa,
Director: Freight (2002-2005)
Transport systems involve mainly the infrastructure, the
moving objects and all related activities. It is because of this simple reason
that infrastructure improvements are taken as transport improvements. This was
recognized as far back as 1776 by Adam Smith in his Wealth of Nations:
"Good roads, canals and navigable rivers, by diminishing the expense of
carriage, put remote parts of the country nearly on a level with those in the
neighbourhood of towns. They are upon that account, the greatest of all
improvements." As it is going to be shown below, there exists a direct
relationship between transport improvements and economic development.
Economic development, as a concept, is frequently confused
with that of economic growth. Whilst economic growth is concerned with
establishing increases in the economy’s productive capacity and output,
economic development, is a wider concept that is concerned with improvements
in the quality of life of the people living in the area. As we can see from
the definition, it is multidimensional and includes infrastructure
development, economic growth and social, cultural, institutional and political
change and human resource development.
THE ROLE OF TRANSPORT IN ECONOMIC DEVELOPMENT
There is strong evidence that transport improvements result
in economic development. Market grows because of improvements in transport.
The market is originally local and small. Demand is restricted by the cost of
getting goods into the village; supply is limited by the cost of getting goods
into the village. Under these circumstances, markets only grow through
increases in transport. The expansion becomes cumulative. Increased outlets
for a commodity give rise to increased real income, which in turn raises the
demand for other products. As new supplies of these come on the market, in
turn, incomes grow further. The linkage of markets by an improvement in
transportation becomes part of a developmental process. In these
circumstances, it is not surprising that economic development is correlated
positively with transport facilities.
The linkages between transport and trade are so strong, and
good transport is essential for competing in the modern global economy.
Furthermore transport affects the efficiency of the labour market and labour
participation rates. Other benefits from transport improvements may include
increased trade and competition from imports, in turn leading to improved
production efficiency, downward pressure on consumer prices and reduced
seasonal price fluctuations.
3.1 ROAD TRANSPORT
3.2 RAIL TRANSPORT
This mode is considered to do more in furthering economic
development than other transport modes. The general effect of road transport
on location of industries is lower transport costs over short distances. A
region with a large market, skilled labour, etc, but weak transport system
may attract industry if proper roads are provided.
3.3 AIR TRANSPORT
This is particularly suited to bulk transport of goods
over long distances. Its primary economic impact is as an inter-regional
3.4 WATER TRANSPORT
This is the fastest mode of transport over long
distances. It is particularly suited to remote industries. Adequate and
suitable air transport to remote areas can, to some extent, contribute to
centralization of activities in those areas.
Airfreight can have an impact on the decentralization of
activities, especially, where high value products with low bulk are
This mode has the lowest distance transport costs. It is
suited to bulk transport of goods over long distances. Its importance in the
development depends largely on the presence of a harbour. Evidently,
worldwide, cities with good harbours are the economic anchors of those
This specialized transport is especially significant in
the transport of petroleum products, natural gases and water over long
Transport infrastructure may be defined as that which is
fixed, which enables the operation to take place. In the White Paper on
National Transport Policy it is defined:
"Transport Infrastructure comprises all physical
elements upon which transport operations take place. It includes roads,
railways, airports, harbours, pipelines, interchange facilities and associated
dedicated power and communication systems."(Department of Transport,
White Paper, 1996:12).
Transport Infrastructure is vital to development within a
country because it is necessary for a level of basic access to be provided.
This means that transport infrastructure must be provided so that the
population of the country has a certain level of access to basic amenities,
which are fundamental to development and provide necessary foundation for
further economic growth. Thus transport infrastructure is required for access
to health facilities, places of work and for shopping or recreational
Transport Infrastructure is extremely important in
facilitating economic activity. In this regard, transport infrastructure is
necessary for production processes to occur in any modern economy. Also it
makes possible, economic activities by giving access to resources and markets,
which may not have occurred up to that point. Furthermore, transport
infrastructure is essential in the optimization of the movement of raw
materials and finished products in that it can provide producers of goods with
routes to their markets, which are more direct, and therefore less costly in
terms of time and operating cost. This shows that transport acts as a catalyst
for the development in its role as a facilitator of economic activity.
WORLD DEVELOPMENT REPORT
According to the World Bank’s World Development Report,
developing countries invest $200 billion a year in new infrastructure, i.e. 4%
of their national output and a fifth of their total investment. This is a
substantial amount of investment and one needs to look at the results. The
results have been dramatic increase in infrastructure services for transport,
which do much to raise productivity and improve living standards.
This report points out that good infrastructure raises
productivity and lowers production costs. It helps determining one country’s
success and another’s failure-in diversifying production, expanding trade,
coping with population growth, reducing poverty, or improving environmental
conditions. There is evidence of 1% increase in the stock of infrastructure
associated with a 1% increase in the GDP across all countries. The per capita
provision of infrastructure services has increased in all regions, the
greatest improvements, reflecting the strong association between economic
growth and the infrastructure.
Transport is an input for every commodity. Users demand
infrastructure services not only for direct consumption but also for raising
their productivity by, for instance, reducing time and effort needed to
perform that activity. Studies linking infrastructure spending to growth of
GDP show very high returns in a time-series analysis. There is definite
evidence that a strong association exists between the availability of certain
infrastructure and per capita GDP. Research has also shown that lower
transport costs increased farmers’ access to markets and led to considerable
The report also reveals the fact that adequate quantity and
reliability of infrastructure are key factors in the ability of countries to
compete in international trade and, even in traditional commodities.
Competition for new markets is especially dependent on high-quality
Evidently, there exists an indisputable relationship
between transport development and economic development. Improvements in
transport result in economic development. Transport infrastructure is an
essential factor because of its role in facilitating transport activities.
Warning however, should be sounded that transport must be planned and provided
in conjunction with total system to ensure optimal promotion of overall
development and general welfare.
Department of Transport. White Paper on National Transport
Department of Transport. A Future for roads in South
Department of Transport Economics. Transport Economics.
Trabed, C. Pretoria : University of Pretoria.
World Bank. World Development Report. 1994.