SOUTH EASTERN KENYA UNIVERSITY

SCHOOL OF BUSINESS AND ECONOMICS

XEA 407: TRANSPORT ECONOMICS.

DR JOSEPH NZOMOI

NAMES REG NUMBERS SIGN

DAVID ORWA D116/0182/2019 ------------

FRANCIS MANGUYE D116/0184/2019 ------------

TRACY WENWA D116/0183/2019 ------------

JUSTUS KIOKO D116/0138/2019 ------------

KELVIN KIMATHI D116/0009/2019 ------------

KIETI E. NDUNGE D116/0136/2019 ------------

1. Creation of employment.

Various modes of transport sectors have led to creation of employment to many Kenyans such as
the air transport sector that has achieved it in areas such airline administrative support, avionics
technicians and flight attendant and this raises these individual’s living standard thus increasing
the economic growth.
2. Interaction of communities.
Individuals working in various transport sectors may be shifted from one geographical location
to another such as an individual being shifted from Nyanza region to eastern part of the country.
This encourages interaction among individuals and through this individuals work together as a
team with no tribalism and thus positively affecting the output.
3. Promotion of domestic trade.

Through good corporation and well maintenance of transport network, producers are encouraged
to produce more since they are much aware that their products with move with ease to various
consumers. It also creates a good environment for those involved in commuting and small
consumers can as well reach the products at various market places with ease, this increases the
demand and the supply at the time leading to economic growth. For example, transportation of
sunflower from Makueni to Nairobi for production of sunflower oil.

4. Reduce environmental degradation.

Through improved transport infrastructure, there will be a need for more land for the production
and a new set of facilities like parking lots and this increases the cost of the land due to new
advancement on it thus leading to growth of the economy like Kibwezi-Mombasa road.

5. Supporting cluster and agglomeration of economic activity.

Agglomeration is the benefits that arise when firms and people are close to each other. Being
close to each other enables firms to use less transport costs and direct more of their revenues to
improve other parts in their firms. In addition to that, it leads to interaction between businesses.
For example, Thika Super Highway links different firms to individuals.
 6. Enhance production of goods.

Producers do produce large number of goods after putting into place how such products will be
delivered to various consumption areas in the country. For example, road transport has enabled
effective transport of Miraa from Meru (Kenya) to Somalia.

7. Enhance mobility of factor of production.

Transport has enabled ease in movement of factors of production such as capital and labor out of
one production process to another. This includes movement between firms within an industry,
movement across industries within a country and movement between countries either within
industries or across industries. Example an investor is constructing an hotel in Kitui and decides
to move his laborers from Kisumu to come and work in his firm due to the laborers’ productivity
at work.

8. Development of industries.

Increasing quality transport facilities leads to access to more market that are efficient and cheap.
Large scale transport infrastructure projects directly affect industries like insurance which are
related to transport sector. It also affects local economies as it encourages business to grow
indirectly. There is improved and ease access to different location for individuals and businesses.
Transport therefore facilitates a wider range of social and economic interactions than would
otherwise be possible. Example when Toyota company partners with sanction insurance
company where these companies are directly proportional to one another such that when the
Toyota purchasing power reduces, it negatively affect the insurance company.

9. Improvement of tourist sector.

The use of air transport enables tourists to travel safely in and out of the country. This means that
there is exchange of foreign money in the country that encourages the growth of tourism sector.
Growth of tourist sector leads to economic growth. For example, Kenya Airways, Fly Emirates.

10. Promote specialization.

Transport helps each region and country to make an optimum and efficient use of its national
resource. Each region can concentrate on production on those goods for which its resources
are best suited.
 11. Urbanization

Transport has led to development of many towns in Kenya as it provides essential mobility
options of people and goods. This influences patterns of growth and level of economic activities
through the accessibility it provides. In Kenya, Nairobi has developed due to expressway, The
Standard Gauge Railway and even due to international airports which connect different countries
in one way or the other.
 References

Banister, D., & Berechman, Y. (2017). The economic development effects of transport
investments. In Transport Projects, Programmes and Policies (pp. 107-123). Routledge.

Nistor, F., & Popa, C. C. (2014). The role of transport in economic development.

Mačiulis, A., Vasiliauskas, A. V., & Jakubauskas, G. (2009). The impact of transport on the
competitiveness of national economy. Transport, 24(2), 93-99.

Pradhan, R. P., & Bagchi, T. P. (2013). Effect of transportation infrastructure on economic

Deng, T. (2013). Impacts of transport infrastructure on productivity and economic growth: