Transport Costs and Spatial Inequalities
Improvements in transport infrastructures (modal and intermodal)
and the related reductions in transport costs may have two
major economic consequences:
Considering the balance between the centrifugal effects
of the exploitation of comparative advantages and the centripetal
effects of economies of scale, globalization and its associated
reduction in transport costs appears to promote more centripetal
than centrifugal forces (more inequalities). However, this
shift is linked with a specific level of transport costs
beyond which inequalities may be reduced. For instance,
on the above figure, high transport costs characterize relatively
self sufficient regional economies and lower levels of
inequalities (A; as measured in GDP per capita). As transport
costs are reduced, inequalities are likely to increase since
economies of scale are usually the first to benefit (B).
In these two phases, the core has a higher development rate
than the periphery and a pattern of unequal trade can emerge,
as it was the case between the developed and the developing
up to the 1970s.
However, further improvements in transport infrastructures
favor a more efficient use of comparative advantages, compensating
for the initial economies of agglomeration advantages.
This results in a
relocation of economic activities in the periphery and a
wider access to the markets of the core. The likely outcome
is a decline in inequalities (C) with elements of the
periphery becoming part of the core. For instance, many developing
countries, especially in Pacific Asia (Japan, Taiwan, South
Korea, Hong Kong, Singapore and more recently China), have
experienced significant growth to become a
pole (core) of the
global economy. Since this growth is highly
related to their growing access to the global economy (export-oriented
development), transportation has been a significant factor
in the reduction of inequalities at the global level.
- Exploitation of comparative advantages. Production
can be located where inputs (such as labor) are minimal,
enabling a better usage of the global competitive advantages.
Outputs can then be shipped to customers across the world.
- Development of economies of scale. A location
can further develop economies of scale by having access
to a wider markets because of lower transport costs. Even
if other locations may have lower input costs, notably in
terms of labor, these advantages may not initially be sufficient enough
to compensate for the advantages of economies of scale.