Driving Economic Growth - Mobility for Development

Geneva, 28 August 2007 - Mobility is key to economic development. Businesses need road, rail, shipping and air networks to transport goods and services to markets, while people need them to get to jobs and use basic services. Mobility is not solely about vehicles; it is also about infrastructure, communications technology, access to resources and energy, facilitation of trade and simplifying burdensome bureaucracy.

It is also intimately linked to the global energy crisis. Today the transport sector accounts for one-quarter of global CO2 emissions and is growing by 2% per year. It is estimated that global demand for oil will increase by 60% up to 2030, and some 75% of this will come from the transport sector, mainly in developing countries.

Increased demand for mobility results in higher energy demands, both to fuel new vehicles and modes of transport and for production and manufacturing processes. It also implies greater demand for raw materials such as rubber, increased demand for cement and asphalt for road building, and higher rates of extraction of metals from mines, including rarer, more specialized metals, many of which are found in less politically stable areas of the world.

As economic growth and industrialization accelerate and livelihoods and incomes improve, the demand for mobility increases. In much of the developing world, demand for mobility solutions to drive economic growth continues to outpace supply, while paradoxically the growing number of vehicles has not been matched by improved infrastructure or road safety provisions.

The World Health Organization rates road accidents as a major killer and notes that 85% of all road deaths occur in developing or transitional countries, a disproportionate burden given that these countries own only 40% of the world’s motor vehicles.

Around half the world’s population now lives in cities, and many of these cities are suffering increased congestion, haphazard urban planning, and increasing pollution from traffic. In addition, efforts to increase rural-urban connectivity can result in the destruction of important ecosystems and habitats and lead to the displacement of poorer segments of the population to make way for roads and rail links.

The expansion of global freight, while a major driver of economic growth, represents a further challenge, particularly for land-locked countries. Inadequate or poor road or rail links, high vehicle operating costs, and transit charges all help push up the costs of transborder freight in landlocked countries. Similarly, although 80% (by tonnage) of trade originating in developing countries is waterborne, the costs and time required to move containers to seaports can have important implications for the competitiveness of traded products.

Efforts to manage the mobility-development conundrum offer exciting and innovative opportunities for businesses.

A World Bank survey of private investment in infrastructure between 1990 and 2004 across the developing world revealed that six countries accounted for 80% of the total investment: Argentina, Brazil, Chile, China, Malaysia and Mexico. The residual 20% was shared among the remaining developing countries with those in sub-Saharan Africa and South Asia receiving the least. Bridging this investment divide could open up many new markets.

Part of the solution to meeting global mobility demand while reducing negative environmental impacts could rest in the development of alternative clean renewable energy solutions to power transport mechanisms and their production. The development of biofuels might be one such example, though a controversial one. Their backers promote them as providing clean energy while reducing the reliance of oil-dependent countries on imported fuel and so contributing to fuel self-sufficiency.

Appropriate institutional frameworks are needed to ensure that biofuel development is truly sustainable. The role of mobility in driving economic growth must be acknowledged more fully and institutional buy-in is essential to harness its potential. Efforts are required to encourage institutional investment to improve transport networks and infrastructure and to ensure that rural and urban transport planning is unified. Removing or reducing burdensome fees for goods transported to shipping ports would help to reduce costs and improve competitiveness.

The mobility challenge also offers opportunities for the development of communications, services, planning and logistics to reduce the amount of time and energy people spend traveling to jobs, markets or resources.

Firms that produce transport infrastructure and transport companies have a vested interest in sustainable mobility. Many see the mobility challenge as an opportunity. What is required now is a strong business voice to encourage the development of appropriate infrastructure and institutional frameworks. This is one of the aspects of mobility that members of the WBCSD Mobility for Development group are working on as part of their efforts to address the mobility divide challenge.