Importance Transport Sector in the Economy

‘It is not the wealth of a nation that builds roads, but the roads, that build the wealth of a nation.’ (John F. Kennedy)

In the history of civilizations, each great power had made progress and successfully prolonged and strengthened their rule to the benefit of their subjects. Roman, British, Muslim Empires of Umayyad and Abbasid and in subcontinent Mughal Empire all had built roads, to move their army and to facilitate commerce. Similarly, the American settlers had rivers and canals to move their produce to the market. The Industrial Revolution brought about significant change and the countries began to develop their transportation system to fully utilize the potential of enhancing their mobility to increase trade and commerce. With the arrival of Railway a new dimension was added in the transport sector. In the twenty-first century the importance of transport to economic well-being of a nation has necessitated more and continued investment in transportation sector for economic development of the country and to compete with other nations.

The European Union in its policy statement emphasized its approach towards building transport system: ‘Modern economies cannot generate wealth and employment without highly efficient transport networks. This is particularly true in Europe where for goods and people to circulate quickly and easily between member states, we must build the missing links and remove the bottlenecks in our transport infrastructure. The trans European network is a key element in the re-launched Lisbon strategy for competitiveness and employment in Europe for that reason alone; to unblock major transport routes and ensure sustainable transport, including through major technological projects.’

Pakistan, with 180 million people, has, to some extent, developed transport infrastructure. Over the years, road traffic has grown significantly faster than national economy. Currently 90 % of national passenger traffic and 95% of freight (in the wake of poor performance of Railway) is through roads. The 3.65% of the total road network which comprises national highways and motorways network carries 80% of Pakistan’s total road traffic. This sector currently accounts for 6% of employed labour force. Road density, an indicator of the level of prosperity and development, is .32KM/KM2 which is less from regional standard. In 1947 road network was 5000 KM now more than 260000 KM road network is available that includes 12000 KM of NHA networks carrying 80% of Pakistan’s commerce.

Lowering domestic production cost, timely delivery of raw material, integrating markets, linking different areas, bringing economic opportunities for people and enhanced productivity are the macro economic benefits associated with the development of road infrastructure. This also encourages tourism, foreign investment and brings competitive advantage over other economies. The economic impact of transportation can be direct and indirect. The direct impact includes accessibility change which consequently enables to save time and cost. The economic multiplier effect, indirect impact, helps in drop of commodities price, enhances service and increases variety.

In Pakistan, National Highway Authority (NHA) plays a major role in development of new projects, operation and maintenance and has reasonably performed well in ensuring road safety and all weather reliability. Besides undertaking different projects, one of the top priorities includes to expand north-south highway network which will ultimately reduce travel time in addition to making traffic more efficient and saving transport costs. Moreover cheaper transport cost will increase private sector productivity which will further diversify and deepen the industrial base necessary to provide jobs for the growing population. Another huge investment plan of NHA is to upgrade the highway from Karachi to Peshawar, linking it to  port of Gawadar and to the People’s Republic of China. This project on completion will cut travel time from 72 hours to 36 hours from Karachi to Peshawar. The importance of this artery for transportation moving between Arabian Sea ports in the South and Central Asia and People’s Republic of China in the north is crucial for regional trade and development of our economy.

For a developing country like Pakistan the return on investment in highway is greater than return on an average investment. If seen historically the return on investment in highway capital has been highest when the existing highway capital was smallest in those countries which started to make progress and achieved significant economic development. Micro economic view of benefits of road infrastructure is bit difficult to quantify more accurately since it deals with specific action taken in business in response to changes in efficiency or reliability of transportation services. In a country like Pakistan the development of road infrastructure brings equal economic opportunities for lower income or previously neglected areas. And consequently enhances national income and integration.

Pakistan’s geostrategic position has made it unique in the region, and the future of Central Asian economies, Afghanistan, China, India and regional trade is highly dependent on development of transportation system in Pakistan. The economic dividends for Pakistan are enormous and will ultimately bring prosperity and better economic opportunities across the board.

It is incumbent upon policy makers to diversify transport system to move goods from highways to other modes including railway but unfortunately the performance of railway instead of improving has gone down over the years resultantly not only railway sustaining heavy losses but the national economy as a whole is suffering a lot. In the wake of above the following is suggested:-

I-Transportation sector be treated as investment rather as a cost. National economy can prosperous and compete other economies if necessary tools required for competition are provided by the govt.

II-Investment should be prioritized and the identification of projects should be carried out strategically keeping in view project’s benefits to the country.

III-Efforts should be intensified to provide transport facility to the land locked economies in the west and also extend help to the neighboring economies in removing bottlenecks for the development of road infrastructure.

IV-An integrated approach demands that transport policy should encapsulate future demands of the country and the region as well.

V-Enhanced road safety should be ensured by equipping NHA with latest technology regarding road safety.