Transcript Transportation and Development

Transportation and Development
Local, Regional and National
Perspectives
Is the Transport Sector Important to
Development?
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Value added by transport is estimated to account
for 3 to 5 percent of GDP.
Public investment in transport typically
accounts for between 2.0 and 2.5 percent of
GDP and may rise as high as 3.5 percent in
countries modernizing outdated transport
infrastructure or building new transport
infrastructure
Transport likewise commonly accounts for
5 to 8 percent of total paid employment
Public Infrastructure Investment Is Large
Proportion of Total and Public Investment in
Developing Countries
60
50
Total Investment
Public Investment
Percentage
40
30
20
10
0
Low Income
Middle Income
Countries with Decentralized
Road Maintenance Have Better Roads
40
35
Percentage
30
Unpaved Roads
Paved Roads
25
20
15
10
5
0
Centralized
Decentralized
Is Transport Sector Important to
Development?
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Demand for freight and passenger transport
in most developing and transition countries is
growing 1.5 to 2.0 times faster than GDP
-the bulk of this increase is for road transport.
Although demand for freight transport (except air
transport) in industrialized countries grows less
rapidly than GDP, in developing and transitional
countries the growth rate is closer to that for
passenger transport
In 1996 private sector lending to emerging
markets peaked at $196 billion. Since then
it has fallen sharply and estimates for 1999
are just over $17 billion.
Transport Sector Issues
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Globalization of trade. Advances in
international logistics (for example, multimodal transport technology, e-documentation,
streamlined customs procedures, etc.) have
greatly expanded the scope for international
trade in goods and services
Congestion and pollution: Growing road
congestion, particularly in cities, generates
pollution and increases road accidents
(about 500,000 persons per annum are killed
in road accidents
Transport Sector Issues
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Transport sector deficits: Poorly managed
public transport services impose a heavy
burden on public finance (for example, until
recently, the transport sector deficit in Zambia
absorbed 12 percent of the government’s total
current revenues)
Expenditure needs: Large sums of money
are required to maintain and modernize
existing transport infrastructure (for example,
road spending alone often accounts for 10
percent to 20 percent of the government’s
development budget)
What Do We Know about Transport and
Development?
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Certain minimum level of transport is
essential to allow development
Generally accepted: necessary but not
sufficient condition for development
No general agreement about size of
transport sector and its causal
relationships with other sectors
Remain uncertain about its inducement
properties and role as catalytic agent
Investment Strategies
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Supply Strategy- if we create transport
infrastructure we assume that it will create
its own demand
This strategy not always realistic because
it raises the issue of lag and lead effects
Does transport lead or lag behind
development?
Best to view this as a circular, mutually
reinforcing process
Lag and Lead Effects: Circular and
Mutually Reinforcing Process
Development Time II
Development Time I
Transport Investment
Transport Impacts
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Economic
Allows market development
Extraction of resources
Stimulates employment
Political
Facilitates administration
Promotes national integration
Social
Information diffusion
Communication
Transport Impacts on Economic Growth
Transport
Improvements
Commodity
Market
Labor Market
Expansion
New Activities
Growth
Economic Production and Specialization
Region B
Region A
Self Reliance
Regional Trade
Trade and
Transport
International
Trade
Trade and
Transport
Product A
Product B
Product C
Product D
Product E
Gateway
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Possible Effects of Transport Improvements
Positive Growth- reduction in resource
expenditure for distribution; prior
dynamism argument-growth capacity
already present transport releases tight
constraint
Slowing Growth- use of scarce
resources instead of investing in
alternatives-lost opportunity costs;
overinvestment in sector
Negative Growth- access encourages
new competition and new products
enter market from outside; depress
local industries
Impact of Transport Cost Reductions on Inequality
Center
B
Inequalities
C
Globalization
Transport Costs
A
Inequalities and Transport Costs
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Improvements in transport and reduction in
costs imply two major consequences: 1/
exploitation of comparative advantage and 2/
development of economies of scale
Diagram A- High transport costs and
relatively low level of inequalities
Diagram B- As transport costs are reduced,
inequalities are likely to increase since
economies of scale are the first to benefit
Diagram C- further improvements in transport
infrastructures favor a more efficient use of
comparative advantages, a relocation of
economic activities in the periphery and a
wider access to the markets of the center.
The likely outcome is a decline in inequalities
Process Model of Transport’s Role in
Regional Development
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Stage I- Road development-often simpleplays role in administration, political
cohesion, and extracting natural resources
Stage II- Road transport important but rail
begins to compete- more stable system with
intent to link and secure regions more broadly
Stage III- Road again is dominant as links
penetrate often remote rural areas to allow
delivery of health services and marketing
Ideal Typical Sequence of Transport
Development
A
B
C
D
E
F
Challenges and Trends in Rural Transport
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Lack of Rural Transport Policy and Strategy
Weak Management Capacity at Local
Levels after Decentralized Decision-making
Inadequate Financing and Standards
Planning and Selection Processes have
Withered Away
Promoting Private Provision of Rural
Transport Services
Promoting Non-motorized Transport