Role of Transport in Economic Development

Dr Sukumar NandiIndian Institute of Management Lucknow

040823 Transport and Economic Development __ S Nandi

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About me

bull Sukuamr Nandibull MA ( Economics) MPhil ( Econ) Calcutta Universitybull PhD ( Economics) Utah State University Logan USAbull Positionbull Professor of Economics Dean ( Planning amp Development)bull Chief Editor METAMORPHOSHIS [ Journal of IIM Lucknow]

bull Past position Indian Institute of Foreign Trade New Delhibull National Institute of Bank Management Punebull Vidyasagar University WB

Calcutta university [ Economics Department]bull Massachusetts College of Liberal arts Mass USAbull Utah State university USA

040823 Transport and Economic Development __ S Nandi

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Importance of Transport

bull Economicndash Good transport provides a clear competitive edge providing-

bull Easy accessbull Low congestion costsbull Good environment so

ndash Efficient transport facilitates economic growth BUTndash Congestion hinders business efficiency and impacts on regeneration

bull Environmentalndash Efficient transport helps provide high quality of life and address climate change BUT

ndash Unmanaged transport causes air quality problems noise and traffic accidents

bull Sustainable communitiesndash A good transport network enables equality of travel opportunity to all BUTndash Lack of transport provides a barrier to social inclusion particularly in areas of

persistent social disadvantage and workless ness

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Ideal Transport System

A fully integrated safe transport network which supports social and economic regeneration and

ensures good access for all which is operated to the highest standards to protect the environment and ensure quality of life

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Transportbull A statutory requirement set within the framework of National

Priorities

bull Removing Congestionbull Air quality and quality of lifebull Accessibilitybull Road safetybull Problems related to Climate change

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Long Run StrategyManage for the growth of transport demand to provide

for the efficient movement of people and goods

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Modern Transport System _ Dubai

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Los Angeles Roadways

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Los Angeles Highways

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Some Recent Trend in Indian Context

bull Some increase in population esp city centrebull More employment but new demands for travel opportunity and bull Continuing problems of accessibility in areas of disadvantage

and workless nessbull Rising freight movement particularly to the portbull Increase in car ownership and use bull leading to

bull Rise in congestion levels and poor air qualitybull Reduction in walking and bus use ndash health and obesity time bombbull Increase in rail use leading to some overcrowding

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How to Manage the city centre of Metro like Delhi

bull The heart of the city region bull Main business district should have easy accessbull Main economic growth areabull Growing importance of tourismbull Air Quality Management Area ndash

traffic levels largely responsiblebull Forecast 10 traffic growth

to the metro in morning peak

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How to manage Traffic in City Centre

bull Aim to provide high quality environment for all users of the city centre

ndash reduce traffic in core centre to reduce vehicle speeds ndash improving air quality for all

ndash avoid fast through traffic to ensure a safe friendly and historic city centre

ndash improve access to all parts of the centre for all users - better signage and road layout

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How to Manage

bull Managing traffic growth relies on ndash Managing the road networkndash Designated freight routesndash Managing parking demandndash Planning and development controlndash Increase in quality of public transport ndash partnership with

operators crucialndash Promoting walking and cycling

bull Using Travel Wise to work with employers to promote travel plans for major businesses health care sites and schools

bull Developing links with key players like different Chambers of Commerce and industrial houses

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Planbull Government of India___ Effortsbull National Urban Transport Policybull 1048673Identifies the growing problembull 1048673Recognizes constitutional devolution to the statesbull 1048673but appreciates the importance of some central functions the need

for technical advicebull 1048673and therefore Advises on an issue by issue basis even on state

functions

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National Transport Policy

bull The declared objectivesbull 1048673A four pronged approach ldquoto ensure easily accessible safe affordable

quick comfortable reliable and sustainable mobility for allrdquo tobull 1048673reduce the existing levels of congestionbull 1048673reduce the impact of motor vehicles on air pollutionbull 1048673improve road safety and foster sustainable technologies

bull National Urban Transport Policy-bull The identified issuesbull 1048673 Public vs Personal transportbull 1048673 Ownership vs usagebull 1048673 Public transport pricingbull 1048673 Public vs private provisionbull 1048673 Technologies for public transportbull 1048673 Choice of fuel and vehicle technologiesbull 1048673 Managing vehicles in-usebull 1048673 Local planningbull 1048673 Non-motorized transportbull 1048673 Financingbull 1048673 Institutional co-ordination

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A Framework

Transport infrastructure improvement

Reduced distances Reduced congestion Other externalities

Cheaper more reliable transport services

Logistical improvements

Facilities consolidation

Location effects Value added effects

Transport infrastructure improvement

Reduced distances Reduced congestion Other externalities

Cheaper more reliable transport services

Logistical improvements

Facilities consolidation

Location effects Value added effects

Transport infrastructure improvement

Reduced distances Reduced congestion Other externalities

Cheaper more reliable transport services

Logistical improvements

Facilities consolidation

Location effects Value added effects

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Transport and Rural Poverty

bull There are however good examples from Asia where Yao (2003) has documented the poverty reducing effects of rural roads in India and the Peoplersquos Republic of China

Xianbin Yao Infrastructure and poverty reduction Making Markets Work for the Poor May 2003 Asian Development Bank Bulletin

bull The elasticity estimates measure the percentage changes of the rural poverty incidence with respect to road infrastructure investments working through different channels

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Effects of Rural Transport on Poverty Reduction

Poverty Reducing Effects Rural Road Investment

India

Elasticity Share

Peoples Republic of China

Elasticity ShareDirect effect throughincrease in agriculturalproductivity

-00119 1792 -00450 2846

Direct effect throughincrease in non-farmemployment

-00300 4518 -0417 2638

Direct effect throughincrease in rural wages

-00204 3072 -00399 2524

Indirect follow-on effectthrough higher economicgrowth

-00041 618 -00315 1992

Overall -00664 10000 -01581 10000

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Effects on Poverty Reduction

3530

39

6468

38

19

52

23

11

25

39

59

29

20

40

8 1017

24

46

1713

29

01020304050607080

Public SectorEmployment

PrivateFormal

Employment

PrivateInformal

Employment

ExportFarming

Food CropFarming

Non-FarmSelf-

Empolyment

Non-Working

Ghana

Main Economic Activity

Incid

ence

(in

perc

ent)

199192 199899 200506

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Trend in Passenger Transport in Industrial Countries

Passenger transport

0

20

40

60

80

100

EU-15 USA Japan

AirWaterborneTram metroRailwaysBuscoachPassenger car

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Trend of Transport in Developed world

Motorization Level and Wealth in OECD Regions 1970-2000

0100200300400500600700800900

10000 15000 20000 25000 30000 35000

GDP per capita (in 1995 US$ PPP)

Car

s pe

r 100

0 in

habi

tant

s

USA EU-15 Japan

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Modes of Passenger Transport in the USA

0

1000

2000

3000

4000

5000

6000

7000

8000

1970 1975 1980 1985 1990 1995 2000

billio

n pkm

US Passcars US Aviation Bus Railway

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EUROPE Modes of Freight Transport

0

200

400

600

800

1000

1200

1400

1600

1970 1975 1980 1985 1990 1995 2000

Billio

n tkm

EU Road EU Short-sea EU Rail

EU Inland waters EUPipelines

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FindingsThe analysis of historic trends shows that road transport is the driving factor of

transport demand (for passenger and freight) from 1970 to 2000 in the industrial countries

External costs of transport are high and mainly caused by road transport

Policy for decoupling has to focus on instruments addressing impacts from road transport

Taxes based on distance driven and the environmental performance of vehicles can encourage important modal shifts

They generate revenue for developing more environmentally friendly modes

The internalisation of external costs of transport leads to a decrease of transport activities and to a further reduction of externalities

Policies for decoupling need to combine a package of instruments including economic instruments and regulations