Investment in transportation infrastructure only significantly impacts on economic development if it opens up the area to new markets in terms of trade and production– Dozie Okoye
Last week, the Centre for the Study of the Economies of Africa (CSEA) held its first bi-weekly seminar for the month of August. Dr. Dozie, Associate Professor at Dalhouse University Canada presented a paper ‘On the dispensability of new technologies: Evidence from Colonial Railroads in Nigeria’ co-written with Roland Pongou of University of Ottawa and Tite Yokossi of the Massachusetts Institute of Technology (MIT)
The Key Questions of the Research were:
- Did the introduction of the railways have a positive short and long run effect in all areas in Nigeria?
- Under what conditions do investments in transportation sector lead to sustained economic growth?
Findings:
Colonial railroads had impacts on local economic development but only in areas that had no available substitutes for export trade purposes. The Construction of railways had a significant impact on development in North but not in the South. A major reason why railways had no significant economic impact in the South was because they had viable pre-existing alternatives such as rivers and roads. The North however, had no other effective means of transporting goods other than the rails.
Also, before the advent of railways in Nigeria, there were already significant economic activities in the south, so railways rather than serving as a platform for economic development, only provided alternative transport routes.
In the North, access to railway had significant and positive impact on literacy, access to information, agriculture and household wealth. The presence of railways also resulted in the development of new cities.
On average, railways had significant impact on local economic development but only in areas with no viable pre-existing alternatives.
Policy Implications
The Nigerian government currently has plans to invest in the transportation sector. However, the Government needs to ask questions such as:
- What would be the impact of cost of transportation of goods by roads, rivers or rails?
- Are there viable pre-existing alternatives?
Investment in transportation infrastructure has to be based on thorough economic, social and environmental analysis and evaluation. A cost/benefit analysis should be carried out to determine the potential economic impact of investing in transport infrastructure.