Transport in regional development – economic scale
A region has its two part Core and Periphery. Economic geography literature (Krugman, 1991; Martin and Rogers, 1995;) deals with these issues by characterizing the world as consisting of a rich core and a poor periphery.
- Reduction of transport cost has two effects –
- Facilitates the cheapest location of production considering raw materials.
- Transporting goods from factory to market.
- In the periphery, production cost is low because of wage and land.
- Low production cost generates agglomeration economics.
- Reducing transport costs between Core and Periphery allows the Periphery to capitalize.
- Regional inequalities between core and periphery reduced by transport improvement.
- Agglomeration economies make regional balance.
