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A Brief Note On Transport And Industrial Productivity

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Introduction Transportation is crucial to industry and the economy. Without it, goods and services would not be able to get to market and labor would be unable to migrate. Based on these statements, one could assume that more transport is always better. Or, one could assume there are diminishing marginal gains to productivity in regards to transport. The sources of these productivity gains have been theorized substantially and numerous methods of trying to determine the gains to productivity have been developed. This is a brief review paper on the topic of transport and industrial productivity. Generally speaking, industrial productivity will be defined here as the output of a region. This is not the only measure of productivity used …show more content…

The final section contains final remarks and a conclusion.
Theory and Methodologies As mentioned in the introduction, transport is theorized to raise industrial productivity. Determining the causal mechanism for these productivity gains is difficult, and measuring them accurately and efficiently is even more difficult due to statistical hurdles and data availability. The three most common approaches to estimating industrial effects of transportation are microeconomic and macroeconomic approaches and a historical or wider benefits approach (Lakshmanan, 2011). The microeconomic approach to estimating the impacts of transport infrastructure uses the basic concept of consumer surplus. Beginning with a downward sloping demand curve and a flat transportation supply curve, the area below the demand and above the supply curve is the consumer surplus. If the supply of transportation is raised, say by building a new road, the supply curve shifts outwards (down in this particular case). This new higher level of supply lowers the cost for users, and therefore increases the gap between the supply and demand curve, resulting in increased consumer surplus (Lakshmanan, 2011). This can then be measured by examining difference levels of road supplied before and after a project is undertaken, and changes to industrial productivity that may have shifted as a

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