Question

10 how does transport play an important role in the economic development of a country? Explain with examples.

Answer 1

Explanation:

The economic importance of the transportation industry can thus be assessed from a macroeconomic and microeconomic perspective:

At the macroeconomic level, transportation and the mobility it confers are linked to a level of output, employment and income within a national economy. In many developed countries, transportation accounts between 6% and 12% of the GDP.

At the microeconomic level transportation is linked to producer, consumer and production costs. The importance of specific transport activities and infrastructure can thus be assessed for each sector of the economy. Usually, higher income levels are associated with a greater share of transportation in consumption expenses. Transportation accounts on average between 10% and 15% of household expenditures, while it accounts around 4% of the costs of each unit of output in manufacturing, but this figure varies greatly according to sub sectors.

The added value and employment effects of transport services usually extend beyond employment and added value generated by that activity; indirect effects are salient.

For instance, transportation companies purchase a part of their inputs (fuel, supplies, maintenance) from local suppliers. The production of these inputs generates additional value-added and employment in the local economy. The suppliers in turn purchase goods and services from other local firms. There are further rounds of local re-spending which generate additional value-added and employment. Similarly, households that receive income from employment in transport activities spend some of their income on local goods and services. These purchases result in additional local jobs and added value. Some of the household income from these additional jobs is in turn spent on local goods and services, thereby creating further jobs and income for local households. As a result of these successive rounds of re-spending in the framework of local purchases, the overall impact on the economy exceeds the initial round of output, income and employment generated by passenger and freight transport activities.

#Answer with quality. #Bal