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Opinions of Wednesday, 6 August 2014

Columnist: Alex

The roles of road transport in economic development

Effective and efficient transportation provide economic benefits that result in multiplier effects such as better accessibility to markets, employment and additional investments. Consequently citizens who are deprived of transportation infrastructure miss out on several economic opportunities.

The development role transport plays in an economy makes it a derived demand as the sector in itself is not productive but is responsive to forces generation in the production and consumption sectors. Generally, a model for transportation and economic development can be summarized as: Providing Infrastructure ? Improving (Physical) Accessibility ? Enhancing Mobility ? Improving Welfare.

In this essay the extent to which transportation impacts on the economy will be discussed. For the sake of space limitation, much emphasis will be made only on some selected areas that transport impacts on namely: agriculture, industry, and education.

TRANSPORTATION AND AGRICULTURE: The lack of transport services, or problems associated with those available, are major constraints to agriculture and rural development. Agrarian communities are highly dependent on a reliable transport system for internal transportation and for linking rural communities to the market centres to sell their farm products and buy industrial goods. When this role played by transportation is provided, for example, then the importance of rural transportation in transforming the rural economy can be appreciated as fifty six percent of Ghanaians live in rural communities. The access created would have the impact of increasing productivity and production as farmers will no longer have to go through the plight of restricting themselves to subsistence farming mainly to prevent food wastage. This means that, agricultural surpluses would be transported to markets or even the urban areas creating place utility. The access will thus provide farmers with larger markets to sell their goods and consequently raise more income. Increases in real income may cause induced expenditure on the part of farmers who may even purchase from other sectors. For example in a studies conducted by 1953 on industrialization in the Gold Cost (now Ghana), the research findings were clear that the purchasing power of the farmer had a direct influence on industrial development at that time. According to the research, a high disposable income generated from agriculture would in turn stimulate the industries as the farmer would have had higher purchasing power to buy from them.

Secondly, the provision of access routes also enables farmers to get in touch with extension services which would in turn teach farmers modern methods of farming to maximize profit and reduce losses. Adaption to these modern methods of farming would again increase productivity and production causing increase in real income which may not only stimulate industries but also go ahead to encourage savings and thus influencing the economy in a positive way.

TRANSPORT AND INDUSTRIES: Generally, two transportation objectives are usually taken into consideration when firms make their choices of location namely: 1) low transportation cost and 2) satisfactory transportation service. Firms that that consider transportation cost to be of major significance usually locate at places where the cost of supplying raw materials are minimized. Availability of an effective and efficient (satisfactory) transport system is also important to firms as it helps facilitate production by increasing accessibility and mobility.

When these two transportation objectives (low transportation cost and satisfactory transportation service) are available in regions, there is high attractiveness to investors because they are assured of lower distribution cost and improved access for both employees and customers. Thus, investing in transport yields growth in a number of firms and expansion of the already existing ones and firm growth implies more jobs. Expansion of existing firms will lead to greater profitability and/or increased market share, and as a result, employment and income will increase as the firms grow. Furthermore, expansion of existing businesses together with the just-created ones will demand more raw material and components from their suppliers. Retail and wholesale businesses can expand as employees will spend more as a result of their additional income.

TRANSPORT AND EDUCATION: Distance is one of the major challenges of education in most developing countries. A study conducted in Morocco 1994 established a relationship between transport and school attendance. According to the research, in the absence of a paved road, only twenty one percent of girls and fifty eight percent of boys ever attended school. On the other hand where a paved road existed, the school participation rate increases to forty eight percent for girls and seventy six percent for boys.

Access to education can be made possible by the provision of transport infrastructure. In areas were communities don’t merit certain educational facilities because of threshold reasons, an effective and efficient transport plan when put in place will make mobility easy for inhabitants of these small communities to the bigger ones to have access to schools.

CONCLUSIONS Despite the significant roles transport plays in economic development, Ghana’s total road network as 2009 stood at no more than 67,448 km with only 41% of the road network considered to be in good condition according to NDPC.

I part company here with the intelligent reader re-emphasising on transportation’s role in the economy as being more of wealth creation rather than wealth consumption. Its impact on the economy is made possible because it provides accessibility which in turn induces mobility. In my view the Ghanaian government needs to increase its commitment to the sector as transportation is indeed the lifeblood of every economy.