Theoretical Comprehension of the Role of Transport in Ensuring Long-Term Economic Development

Abstract

The objective of the study described in the article is to develop a theoretical basis for assessing the long-term impact of transport on economic development in the context of a consistent decrease in transport costs. At the same time, transport costs are proposed to be considered considering the risks of loss of goods during transportation and violations of delivery times, as well as damage to the goods owner from blocking of the capital embodied in the product during its transportation.Using deductive method in economics, a theoretical model of influence of transport costs on production and sale of goods is proposed, based on which it is concluded that reducing transport costs is a catalyst for economic growth, launching long-term interrelated processes of expanding the geographical area of sales of goods and ensuring growth in volumes, scale, and production efficiency. In contrast, lack of significant progress in development of transport and persistence of high transport costs contribute to conservation of the technical and technological situation and low production efficiency. Based on examples from economic history and modern practices, using methods of statistical analysis and technical and economic calculations, it is shown that the proposed model is consistent with empirical data. Based on the developed model, recommendations were formulated regarding the directions of transport developments desirable for ensuring economic growth. In particular, the need for development of heavy traffic on railways is revealed that will serve to reduce the cost of transportation of relatively inexpensive goods and expand the possibilities for their delivery over long distances, as well as for high-speed transportation for expensive goods that are sensitive to delivery time. Attention is focused on importance of creating an appropriate transport infrastructure and the need to unite the efforts of the state and business for this purpose, contributing to development of transport infrastructure through both institutional instruments and budget investments within the framework of private-public partnership projects.It is concluded that commodity exchange (trade and transport) is a significant factor in economic development, stimulating an increase in production volumes and efficiency. Therefore, economics should not be built «around production» or «around exchange» but proceed from their interaction and the active role of both of these spheres in the process of economic development.