Adapted from: E. J., Gauthier H. L. and M. E. O'Kelly (1996) Geography
Trade, Transportation and Geographic Specialization
The evolution of transport systems impacts regional
economies in terms of their level of specialization. More connected
regions tend to be more specialized while less connected regions
tend to have a lesser degree of specialization. The above figure represents
a simplified example of how changes in transport may impact on the specialization
of regional economies.
In a situation of self reliance there is no efficient transport link
between two regions; goods cannot be transferred in a cost effective
manner. They are isolated from one another and must satisfy
their own needs. Each region thus tends to be similar in terms of economic
output. While regions have different environmental endowments, they
must still provide for every basic necessity such as food. Quantities
produced depend on the demand and the industrial capacity.
With a transport link between two regions, specialization can take
place. Each region develops its respective potential; Product A for
the first region and Product B for the second, assuming that they respectively
have a comparative advantage for these two products. If Product A is
cheaper to produce in the first region, it becomes more efficient to
lessen the production of other products and concentrate on Product A.
Respectively, the second region can do so for Product B. Therefore,
the first region can allocate more resources for the production of Product
A and can then sell the surplus (minus local consumption) to the
second region. The key of this specialization becomes the difference
between the transport costs and the production costs of a product. If the
unit costs savings resulting from specialization exceed the unit transports
costs, then specialization can take place.
Regional specialization is greatly expanded with international trade.
By having access to a larger market and a range of products through a gateway, namely a seaport, regions A and B can specialize even more in the production they have
respective comparative advantages on. They can even cease production
in a specific array of products, which are now imported. Under such
circumstances, the reliance on transportation increases, even if its
relative costs may be declining.