Significance of Transportation in Economics

This Slides describes the significance of Transportation in Economy of the country

1. Economic Significance of Transport UNIT 1.1

2. Economic Significance of Transport Effective transport ( tpt ) is indispensible for the economic progress of the world. More than a century ago, due importance was not attached to transport because people generally believed that only manufacturing industries, banking and agriculture could develop the national economy. Tpt is a public utility like Water supply and Electricity etc.

3. Economic Significance of Transport Three chief characteristics of public utility are; ….collective demand made by the society …..efficient and adequate supply ….its ability to exercise the power of discrimination. It must be noted that if transport service is not adequate, people would suffer.

4. Economic Significance of Transport Now-a days , the entire economic life of the people of a country depends upon transport services– from production of raw materials to the distribution of finished products. Tpt cost being an element of the cost of production, enters into the selling price of commodities; and thus it affects consumption to an appreciable extent.

5. Economic Significance of Transport An improvement in the technique of modern transport has considerably increased the wealth of the society through the development of trade and commerce. Now-a Days a transport service is either nationalised in the interest of public or controlled by the State.

6. Economic Significance of Transport 1Transport and Production …. Tpt required at several stages of production An increase in the efficiency and sufficiency of tpt lowers the cost of production, and reduces the selling price of a commodity. ..increases the production and demands for commodities gone up.

7. Economic Significance of Transport 2)Transport and Exchange By performing the major function of marketing , tpt plays a dominant role in the exchange of wealth. As different industries grow in the different parts of the world, it facilitates exchange, and promotes competition. The most obvious effect of improved tpt is to make available to a community the goods which must, of necessity, be produced elsewhere.

8. Economic Significance of Transport 3 )Transport and Distribution Tpt has a great bearing on distribution. It increases the demand , increasing the wages of labour . The low rate of tpt enables the owners of outlying lands to send their commodities to the market… thus increasing total supply and causing prices to go down. The determining factor of rent (so far as it depends upon location) is tpt .

9. Economic Significance of Transport 4)Transport and Consumption Tpt exercises its profound influence on wants , mode of consumption and the quantity of consumable goods also. Tpt enables consumers to enjoy commodities in diverse varieties which are not produced in their country.

10. Economic Significance of Transport 5 )Transport and Territorial Division of Labour Tpt facilitates the territorial division of labour or regional specialisation . It promotes division of labour by widening the market for a commodity. Several factors such as climate, availability of raw material, labour and capital, technical skill etc.,are responsible for the localisation of industries. But major factor of tpt should not be ignored. E.g ; Kanpur- the industrial capital of North India It gets raw materials for textile mills from Bombay(Mumbai), labour from eastern U.P and coal from Bihar. E.g 2 Mumbai industrial concentration……good tpt facilities.

11. Economic Significance of Transport 6)Transport and competition An improved system of tpt affects competition to an appreciable extent: lowering the prices of commodities for consumers. Competition is caused either due to the expanded market or to competition among carriers or transprters . The resultant effect that transport facilities are much improved and number of transport vehicles also increases.

12. Economic Significance of Transport 7 )Transport and Land utilisation The value of land situated near a railway station or bus stand or lying on a bus route , has gone up several times.

13. Economic Significance of Transport 8)Transport and Price stabilisation Tpt plays an important part in price mechanism also- that is of price equalisation and sabilisation . Bumper crops… inadequate tpt lowers prices. If prices are stabilised , producers are happy as they are certain of getting a fixed rate throughout the year.

14. Economic Significance of Transport 9 )Transport and Utility Tpt is a public utility service which creates time and space utilities. Space utility…. Storage in warehouse Time utility…is enhanced in emergencies as the desired commodities are quickly transported to the places of mishaps. A commodity which has no usefulness or only little utility at a place where it has been produced , must be transported to the place where it is demanded. E,g : Assam Wood

15. Economic Significance of Transport 10)Transport and Scale of Production The scale of production of industries is determined, among other things, by transport and its charges. Small industries develop at places where they get raw materials– their product being consumed locally or enjoying district-wide market. Medium and large Industries… depends on tpt … Undoubtedly , tpt has provided impetus to large scale production.

16. Economic Significance of Transport 11)Transport and Agriculture Before and after sowing and after the stage of harvesting, tpt plays a significant role. In villages- tpt by bullock cart…. Needs trucks and railways to transport to distance places.

17. Economic Significance of Transport 12)Transport and Industrial Deveolpment Industries depend upon tpt ; and tpt creates new industries. Industrial development would not have taken place if there were no tpt . E.g Chittaranjan locomotive works, I.C.F., Hindustan Shipyard etc. Tpt and allied industries have contributed to the industrial development.