Types of Transport Impacts

The relationship between transportation and economic development is difficult to formally establish and has been debated for many years. In some circumstances transport investments appear to be a catalyst for economic growth while in others, economic growth puts pressures on existing transport infrastructures and incite additional investments. At start there are different impacts on the transport providers (transport companies) and the transport users. There are several layers of activity that transportation can valorize, from a suitable location that experiences the development of its accessibility through infrastructure investment to a better usage of existing transport assets through management.

This is further nuanced by the nature, scale and scope of possible impacts. Timing of the development varies as the impacts of transportation can precede, occur during or take place after economic development. The lag, concomitant and lead impacts make it difficult to separate the specific contributions of transport to development. Each case study appears to be specific to a set of timing circumstances that are difficult to replicate elsewhere. Types of impacts vary considerably. The spectrum of impacts range from the positive through the permissive to the negative. In some cases transportation impacts can promote, in others they may hinder economic development in a region. In many cases, few, if any, direct linkages could be clearly established.

Cycles of economic development provide a revealing conceptual perspective about how transport systems evolve in time and space as they include the timing and the nature of the transport impact on economic development. This perspective underlines that after a phase of introduction and growth, a transport system will eventually reach a phase of maturity through geographical and market saturation. There is also the risk of over investment when economic growth is credit driven, which can lead to significant misallocations of capital, including in the transportation sector. The outcome is a surplus capacity in infrastructures and modes creating deflationary pressures that undermines profitability. In periods of recession that commonly follow periods of expansion, transportation activities may experiment a setback, namely in terms of lower demand and a scarcity of capital investment.

Transport, as a technology, typically follows a path of experimentation, introduction, adoption and diffusion and, finally, obsolescence, each of which has an impact on the rate of economic development. They follow a cyclic behavior where a high level of benefits and productivity is realized in the early phase while later phases are facing diminishing returns. Containerization is a relevant example of such a diffusion behavior. As most innovations are eventually abandoned, many technologies go through what can be called a "hype phase" with unrealistic expectations. In addition, transport modes and infrastructures are depreciating assets that constantly require maintenance and upgrades. At some point, their useful lifespan is exceeded and the vehicle must be retired or the infrastructure rebuilt. Thus, transport investments for their amortization must consider the lifespan of the concerned mode or infrastructure.