Whenever possible, well-functioning corridors should promote multi-modal transport, with road and rail as the core components.
In the developed world, where time and cost drive decisions, multiple transport infrastructures exist to guarantee mobility of people and freight. But in the developing world, where infrastructure is often still incomplete and inadequate, the first order of business is to ensure access of goods, services, and people to external markets. Transport corridors facilitate this access. Whenever possible, well-functioning corridors should promote multi-modal transport, with road and rail as the core components. Investment in high-performing transport infrastructure and logistics optimizes cost and increases the reliability of transport services that are critical for growth and development.
As roads and railways connect, they create opportunity. They link agricultural areas to national or regional markets, unlocking their productive capacity. By bridging distances between cities and villages, roads and railways fertilize economic and social ground within countries and across borders. Such growth brings countries closer toward regional integration and the promise of improved livelihoods.
Many years ago, Ethiopia’s then-minister of transport explained to me the place of transport links in the regional psyche. “With so many different ethnic groups scattered across such a large territory,” he asked, “how to make it possible for everybody to feel part of the same nation without a comprehensive road network linking them all together?” He answered his own question. “Without roads, there is no democracy,” he declared. He understood first-hand that the transport sector promotes social, economic, and political integration.
The development agenda
Designing transport projects to maximize their development impact requires a focus beyond the origin and destination points. Let’s look at roads. A road segment is part of a network, and any addition to that network must consider its consequences on the distribution of traffic across the whole spectrum of connections. Then—and this is critical in situations where transport infrastructure is still scarce—an assessment must be made of the services the new road will provide the population. Important questions include: How many people will get access, or better access, to social services like education and health? How much easier will it become for farmers to get their production to markets, and therefore move from subsistence farming to commercial exploitation? How many new job opportunities will become accessible for people living away from economic centers?
At this point, it becomes clear that building a transport infrastructure is just one element of the development agenda. Another element involves how people will be able to use it. For example, what kind of transport services will actually become available to them, and under which conditions? Building a new road in a country where freight services are operated by a monopoly, for instance, may just extend the rent of the monopolist while offering little benefits to producers, unless the road project ushers in industry reform and introduces competition in transport services. These are useful means to an end.
Similarly, rail lines are not developed in isolation. By design, a railway will link economic and social areas where traffic, people, and freight can be consolidated in significant volumes. Any door-to-door connection within its area of influence, therefore, will almost always involve a combined rail-road transport service. Underscored again is the need to factor in the network effect, across the whole transport system, of any individual addition.
Even in cases when new rail links are primarily driven by industrial developments—mining projects, for instance—they can potentially contribute to social inclusion objectives if all potential network effects are carefully assessed beforehand. Often enough, well designed and compensated public service obligations may offer remote communities enhanced access to economic opportunities and maximize the beneficial fallout of the new rail infrastructure.
For both road and rail development projects, concessions offer access to additional financing options and a wider range of exploitation techniques. When carefully designed to take advantage of network effects and mesh with the non-concessioned transport system, they can provide a new development impetus by helping close the mobility and access gap that often keeps large segments of the population trapped, literally, in poverty. In these times of shrinking fiscal space, there is no doubt that transport concessions, road and rail in particular, are a powerful tool to keep economic development on track and power inclusive growth.