Economic Evaluation: Transportation Scenario
Introduction
Transportation is one thing that steers the economy of a country to great heights. This is because it creates movement in the process of transacting. The economy is known to grow when there are large amounts of products and services being moved in the market (Hoag & Hoag, 2006). Therefore, the absence of sound transportation platform is a cause of economic failures.
To present the necessity of transportation in a country, an economic scenario will be quite useful. To create the scenario, it is important to note that there are very many forms of transportation. Suppose there is a crackdown on un-road worthy vehicles in the roads of a country, what would be the impact on the economy of a country? This scenario brings about the effect of interfering with the road transport. This means that the other forms of transport will be used more by those travelling or transporting their goods. With this kind of occurrence, the economy will be affected a lot since road transportation caters for most of the transportation work.
To be able to carry out a full economic evaluation of the above scenario, there are several sets of information that are required. These include:
- The value of goods transported using the motor vehicle transport
- The efficiency created by having the current level of motor vehicles in the transport network
- The amount of taxation collected as a result of having the current number of motor vehicles on the road.
- The tax rates involved at the given period
In economic evaluation, there is the aspect of uncertainties. The major uncertainties that might occur include:
- The possibility of the railway transporters increasing their operational capacity
- The possibility of the air transporters increasing their capacity
- The possibility of companies opening plants all over the country
- The possibility of the government increasing the taxation rates for the period
With the overall economy changing, several factors will be affected. One of them is the countries revenue. With the transportation sector affected, the country’s collection will be reduced. This is because the income which is obtained from certain operations which depend on transportation will go down. This means that the company’s target revenue will not be attained at the given time. Secondly, the infrastructural development in the country will stagnate. This is because the country will not be able to put money in a project which is not productive enough. Since many people will seek alternatives I transportation as a result of the failed road transport, this will lead to ignorance from the road development authorities.
With the transportation sector affected by the interference of the transportation in the country, the society will be affected a lot. This is through the areas that depend on motor vehicle transportation. With this interference, the government will not be able to set high goals in terms of revenue collection. This is because the government will be sure that the level of revenue expected for the given period will be low. This means that provision of certain social amenities will not be possible as before. Secondly, the environmental welfare will be not taken care of well. This is because the finances will not be available to carry out the projects which are required to sustain social as well as environmental focused projects.
References
Hoag, A. & Hoag, J. (2006). Introductory Economics, World Scientific.
