Impact of Transportation on the Economic Development of Nigeria (An Assessment of Road and Rail)
Chapter One
OBJECTIVE OF THE STUDY.
The broad objective of this study is to examine the impact of transportation infrastructure improvement on economic growth in Nigeria. The specific objectives of the study are as follows:
- to describe the situation of transportation infrastructure in Nigeria
- to evaluate the empirical linkage between transportation and economic growth
- to access the channel through which transportation affects economic growth
CHAPTER TWO
LITERATURE REVIEW
In this present section, the various literatures on impact of transportation infrastructure improvement on economic growth in Nigeria will be reviewed. This study of literature will be classified into three broad groups.
CONCEPTUAL BACKGROUND
Transportation also contributes to the economy by providing millions of jobs. It allows men and women to earn their living by manufacturing vehicles and by driving, maintaining, and regulating them to allow for the safe and efficient movement of goods and people. One out of every seven jobs in the United States is transportation related Transportation jobs in transportation industries as well as in non-transportation industries employed nearly 20 million people in 2002, accounting for 16 percent of U.S. total occupational employment. For example, the for-hire transportation sector employed over 44 million workers In 2002 More than 60 percent of these for-hire workers are either in freight-related occupations or in Jobs that directly support freight transportation. An additional 1.7 million workers are employed in transportation equipment manufacturing and another 4.5 million in transportation-related industries such as automotive service and repair, highway construction, and motor vehicle and parts dealers (USDOT BTS 2004). Transportation-related occupations also make up a significant portion of the employment of non-transportation industries such as truck drivers, freight arrangement agents, and freight-moving workers in the wholesale and retail industries. In 2002, there were about 9.2 million people employed in transportation-related occupations in non-transportation industries.
Growth in productivity is the fundamental driving force for economic growth Productivity growth in freight transportation has long been a driving force for the growth of U.S. overall productivity and contributed directly to the growth of the U.S. GDP. For example, from 1991 to 2000 labor productivity rose 21 percent in the overall non-farm business sector’ During the same time period, labor productivity rose 53 percent for rail, 23 percent for trucking, and 143 percent for pipeline. All three of these modes are primarily engaged in freight transportation. Such productivity gains result in lower transportation costs and lower prices for consumers. This brings savings to consumers and reduces business costs.
Measuring Economic Benefits of Transportation
If all of the steps described above were followed, planners and policy makers would be left with a list of investments that have the potential to generate economic benefits. The three part analysis is shown in Figure A-7 provide a reasonable comprehensive analysis of each project’s likely contribution to economic development.
When a highway improvement is proposed, the economic evaluation must first identify which industries will be impacted. This involves the following sequence of three analytical steps within the Commodity Flow analysis.
Locate the improvement on the highway or rail network.
Identify what commodities are being shipped and person trips on the roadway that will have the proposed improvements and forecast the growth of these commodities.
Locate the origins and destinations of these commodities and identify the industries that are involved in shipping and receiving.
Road Transport
An automobile is a wheeled passenger vehicle that carries its own motor. Different types of automobiles include cars, buses,trucks, and vans. Some include motorcycles in the category, but cars are the most typical automobiles. As of 2002 there were 590 million passenger cars worldwide (roughly one car for every ten people), of which 170 million in the U.S. (roughly one car for every two people).Wikipedia, (2007)
The automobile was thought of as an environmental improvement over horses when it was first introduced in the 1890s. Before its introduction, in New York City alone, more than 1,800 tons of manure had to be removed from the streets daily, although the manure was used as natural fertilizer forcrops and to build top soil. In 2006, the automobile is recognized as one of the primary sources of world-wide air pollution and a cause of substantial noise pollution and adverse health effects.
The first forms of road transport were horses, oxen or even humans carrying goods over dirt tracks that often followed game trails. As commerce increased, the tracks were often flattened or widened to accommodate the activities. Later, thetravois, a frame used to drag loads, was developed. The wheel came still later, probably preceded by the use of logs as rollers.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
This chapter presents the various components of the methodology used in the study. It contains the area covered by the study, sources of data used in the study, specification of the model, technique analysis. Issues bordering on the test for statistical significance of data are also addressed in this section of the study.
SPECIFICATION OF THE MODEL
The model can be specified when an analytical framework in the form of a generalised Cobb- Douglas production function is been taken into consideration. The production function would include infrastructure stock that is output of transport sector as an additional input of production function along with investment in transport infrastructure and the gross domestic product as the output. Such that Following Pravakar, Ranja, and Nataraj (2010), This study will be assuming a generalised Cobb-Douglas production and extending the Neo-classical growth model to include transportation infrastructure stock (i.e output of the transport sector) along with transportation capital stock (i.e investment on transport infrastructure) as the input of the production function and the gross domestic product as the output. The generalised form of Cobb-Douglas production is open to the possibility of constant return to scale as suggested by Solow-type model (Solow, 1956). On the other hand – the model also admits the possibility of constant or increasing return to capital as suggested by some endogenous growth model.
The Gross Domestic Product (GDP), which is the value of output produced within a country at a particular time, usually a year, is the most recognised measure of economic growth. Thus, to measure the impact of transportation on economic growth, the value of the GDP will represent economic growth, thus serving as a dependent variable, depending on transportation infrastructure.
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND DISCUSSION
Introduction
In this section of the study analysis and interpretation of the result, the empirical and descriptive method of analysis will be utilized to achieve the earlier stated objective of the study.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
INTRODUCTION
This chapter will focus on the summary of findings, conclusion and recommendations of appropriate policies. All these will be based on the results gotten from the regression and the analysis of results.
SUMMARY
This study looked at impact of transportation infrastructure improvement on economic growth in Nigeria between 1981 and 2011 using Central Bank of Nigeria (CBN) statistical bulletin data. Improvement in transportation infrastructure are related to transport industry efficiency, creation of social and economic benefit, reduced cost associated with transportation which leads to greater productivity, reduce distribution cost, thereby reduce production cost, expand market, increase employment demand, and increasing National output.
The channels through which transportation affect economic growth was viewed in the study through saving of labour force in which having an efficient and effective mode of transport, communication, and movement will be made easier which will save time, cost and reduce the rate of accident. The study also showed that death rate in road accident is high which leads to loss of live and reduction in labour force because when there is increase in accident there will be increase in death rate which will lead to a decrease in labour force in the economy.
The empirical linkage between transportation and economic growth was captured through the model (which made use of transport sector output, transport expenditure and gross domestic product) which captured the relationship between transportation and economic growth through statistical analysis. We found that economic growth is positively influenced by transportation whereby transport output, transport investment exerts positive influence on GDP, which implies that improvement/ increase in transport sector will lead to an increase in GDP in the country which will bring about economic growth because transportation provide intermediate service for Agricultural sector, Manufacturing output, investment e.t.c, which stimulate the economy to grow.
CONCLUSION
The study reveals that there is a relationship between transportation infrastructure and economic growth. It discovered a positive relationship between GDP, transportation investment and transportation output. Thus, an increase in the output and investment of the transport sector will lead to increase in the GDP of the country.
These findings are supported by empirical studies such as Pravakar, Ranjau and Nataraji (2010) study, and it is further illustrated in Nogzi and Mulikat (2010) study. They found that infrastructural investment positively contributes to economic growth.
RECOMMENDATION
Based on the findings of this study, Nigeria gross domestic product can be increased if the following recommendations are taken into consideration.
The Federal government budget allocation to transport sector should be increased because this will increase the funds directed to improve the available infrastructure and to add to the existing infrastructure. Also, there should be full implementation of public private partnership (PPP) in transport sector project as recommend in the National draft on transport policy for the Federal Republic of Nigeria (2010).
The Federal Ministry of Transport should balance the federal government effort through transportation regulations, strict monitoring of implementation of the allocation, improving the quality of human resources and the involvement of the private sector. They should provide adequate transportation facilities in terms of road signs, traffic lights, street lights, medians, drainages, and functional mass transit vehicles by government and private individuals is necessary so as to minimize traffic congestion and accidents.
The Federal Ministry of Transport need to increase the number of quality road networks as well as introducing high occupancy vehicle lanes. Proper maintenance of existing road networks should be enforced. There is also need for construction of flyovers at crossroads to lighten up notorious congestion areas. Also, they should be increased investment in research on other modes of transportation such as opening up water ways, revitalizing the railway system so as to reduce congestion and pressure on the existing roads.
Nigerians should ensure to pay charged taxes, toll gate fee and fines for breaking the traffic rules because this will balance the government effort in providing world-class transport facilities. Also, people should make use of other mode of transportation that are available in the country.
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