The transportation industry has accelerated the dynamics of economic globalization.
The transport industry has improved cross-industry integration and intensified the
process of spreading growth impulses in its economic area and worldwide. In
addition, traffic development strengthens the regional exchange of information and
economic factors, and expands the market space, which affects the economic
growth of the surrounding areas. It has several advantages in terms of transportation
revenue of local logistics companies, the logical flow of factors to these areas,
reducing production costs and promoting regional economic growth. Nowadays, it
has become a source of global production networks, and the production networks
are becoming more distributed as the transportation sector develops. It is also an
essential input to the day-to-day running of the economy and of great importance for
employment and social development. Develop transport infrastructure and improve
economic performance by reducing costs, increasing labour productivity, promoting
trade and improving employment opportunities. While the poor and inadequate
transportation infrastructure creates restrictions on material transportation, labour
movement, market expansion and economic growth (UNCTAD .2019).
The positive influence of infrastructure on economic growth and inclusive social
development has been well documented by researchers in several social science
disciplines. Infrastructure affects productivity and output directly as part of the
formation of gross domestic product and as an input to the production function of
other sectors. Moreover, it does so indirectly by reducing transaction and other
costs, allowing more efficient use of conventional productive inputs. For example,
poor power quality can impose additional costs on companies such as idle labour,
lost production, or damaged equipment. However, modern transportation systems
could increase manufacturing competitiveness cheaply and quickly by transporting
raw materials to producers and finished goods to consumers (UNCTAD .2019).
Quality infrastructure is essential for Africa to achieve the United Nations (UN)
Sustainable Development Goals (SDGs), the African Union (AU) Agenda 2063 and
the African Development Bank (AfDB) High Five Goals. It is needed to increase
economic productivity and sustain economic growth. Good infrastructure has a direct
and indirect impact on growth. It increases total factor productivity (TFP) directly,
since infrastructure services are input into production and have a direct impact on
firm productivity. It thus promotes overall economic output in view of its own
contribution to Gross Domestic Product (Tralac .2019).
Good infrastructure can also indirectly increase total factor productivity by reducing
transaction and other costs and enabling more efficient use of conventional
productive inputs. It does this by being a factor of production for virtually all goods
and services produced by other sectors. In addition, it can affect the adjustment
costs of investments, the durability of private capital, and the demand for and supply
of health and education services. When transportation, power, or
telecommunications services are absent or unreliable, businesses face additional
costs (such as purchasing power generators) and struggle to adopt new
technologies. Better traffic increases the effective size of labour markets
(UNECA .2016).
In addition, by reducing transaction costs, infrastructure encourages more efficient
use of productive inputs such as land, labour and physical capital. This leads to
higher total factor productivity, expanding production frontiers and profitable
investment opportunities. For example, reducing the cost of broadband internet could
encourage the development of e-commerce and a digital economy. In addition, the
greater availability and reliability of infrastructure is poised to develop human capital
through improved education and health services, which should foster greater
economic prosperity. Other transmission channels include facilitating trade flows,
stimulating aggregate demand, and enhancing a country's attractiveness as an
investment destination. In addition, infrastructure projects create short-term jobs
during construction and contribute to growth (UNECA .2016).
