Chapter 16: Transportation Systems and Economic Development

Intuitively there would seem to be a link between the transport system and the way and the pace at which economic and social development progresses. However, while the importance of transport in economic growth and development has never been seriously questioned, its exact role and influence have been subjected to periodic reappraisals. A major underlying problem is that our understanding of what causes economic development is poor and hence the role of any particular sector in the process is murky.

The exact importance of transportation infrastructure as an element in the economic development process has long been disputed. Much seems to depend upon the degree to which supply considerations are thought important. The demand-side Keynesian approach indicates that causality runs from economic exploitation to income and on to infrastructure generation. In contrast, neoclassical economics is supply-driven and transport and other infrastructure are generally seen as important elements in the production function. Much of this recent work follows the neoclassical mode in looking at the links between infrastructure provision and economic development through some form of aggregate production function analysis. It has sought to see how well the aggregate production function, and its individual elements, explains economic performance.