TRANSPORTATION AND THE ECONOMY

Transportation systems are closely related to socio-economic changes. Economic opportunities are likely to arise where transportation infrastructures are able to answer mobility needs and insure access to markets and resources. However, even if transportation has positive impacts on socio-economic systems, there are also negative consequences such as congestion, accidents and mobility gaps. Transportation is also a commercial activity derived from operation attributes such as transportation costs, capacity, efficiency, reliability and speed.Thus, from a general standpoint the economic impacts of transportation can be direct, indirect and induced. For the direct impacts, the outcome of capacity and accessibility changes where transport enables employment, added value, large markets and enables to save time and costs. Indirect impacts, the outcome of the economic multiplier effects where the price of commodities, goods or services drop and/or their variety increase. Induced impacts, the outcome of economic activities and firms partly relying on efficient transport services for both passenger and freight.  Transportation links together the factors of production in a complex web of relationships between producers and consumers. The outcome is commonly a more efficient division of production by an exploitation of geographical comparative advantages, as well as the means to develop economies of scale and scope. The productivity of space, capital and labor is thus enhanced with the efficiency of distribution and personal mobility. It is acknowledged that economic growth is increasingly linked with transport developments, namely infrastructures but also managerial expertise is crucial for logistics.Transportation developments that have taken place since the beginning of the industrial revolution have been linked to growing economic opportunities. Instead, modes have been linked with the function and the geography in which growth was taking place. This is particularly the case for multinational firms that can benefit from transport improvements in two significant markets that are commodity market and labor market.For the commodity market, improvement in the efficiency with which firms have access to raw materials and parts as well as to their respective customers. Thus, transportation expands opportunities to acquire and sell a variety of commodities necessary for industrial and manufacturing systems. Labor market, improvement in the access to labor and a reduction in access costs, mainly by improved commuting (local sale) or the use of lower cost labor (global scale).