Chapter 12: Transport and Regional Growth

It is well established that there is a strong correlation between economic growth and demand for transport, and that this is the case both for freight and passenger transport (Baum and Korte, 2002). Passenger traffic (passenger-km) has an income elasticity of demand a little more than unity, and freight traffic (tonne-km) an income elasticity of demand of about unity. What is perhaps less clear is the direction of causality in this relationship. On the one hand, it is possible to view transport essentially as demand that is derived from economic activity, or as Vickerman (2002) points out, economic growth requires trade, and trade requires transport. Economic growth implies greater division of labor and spatial specialization, the development of new technologies requiring transport such as just-in-time, growth in commuting and business travel, and growth in the quantity of goods and services (essentially people) to be transported. At the same time, rising household incomes generate increased demand for travel, both leisure activities and for shopping.