An efficient transport system is not only a pre-requisite for
economic development but is also important to achieve the objective of
economic integration in the world economy. Insufficient transport
infrastructure results in congestion, delay delivery time, fuel waste,
pollution and accident1 which built inefficiencies in the economy and
costs the economy 4 to 6 percent of GDP each year [Shah (2006)and World
Bank (2007)], which can be saved by investing in transport services.
Realising its importance, the government of Pakistan has initiated
National Trade Corridor Improvement Programme (NTCIP) in 2005 to improve
logistic and transport infrastructure so that it can fulfill the demand
of economy more efficiently. This five years programme includes all
sectors that improve performance of corridor-high way namely, road
transport, railways, airports, and ships etc. The objective of the
programme is to reduce the cost of doing business and improve quality of
services. The study quantifies the efficiency of transport sector by
evaluating the impact of public investment to improve transport services
on the economy in general and on cost of land transportation in
particular; i.e., cost of freight and passenger movement and cost of
externalities such as congestion, air pollution and accident. The
outcome of the study depends on how improved facility is achieved, i.e.,
who bears the cost and who benefits etc. This paper assumes tax financed
public investment that not only change domestic price and demand, but
also welfare and poverty. The issue is analysed in computable general
equilibrium framework taking into account inter linkages of transport
sector with rest of the economy. First, a social accounting matrix (SAM)
is developed with a detailed transport module. Then, a dynamic CGE model
is developed around this SAM and simulations are conducted for short run
and long run analysis of public investment in trans port
sector.
Fuel Prices as a Factor of Shaping Profitability of Road Transport in Poland
