Regional Economic Development: Transportation & Communication Networks

Instructor: Christopher Muscato

Chris has a master's degree in history and teaches at the University of Northern Colorado.

Economic change often occurs on a regional scale. These changes can be heavily impacted by existing transportation and communication networks. In this lesson, we'll explore different networks and see how they influence economic development.

Economic Development

In recent years, we've seen a lot of change within many cities. Old neighborhoods suddenly become ritzy and fill with cute little shops, people move into different areas, and new spending habits emerge. In my town, what used to be a street of dive bars now has smoothie stands that sell kale. Kale. The economic health of a region can change, and two of the biggest factors in this change are transportation and communication. As these networks are altered, improved, changed, or replaced, economies can shift as well. Basically, these networks are the pathways to economic development.

Transportation

Let's start by looking at the impact of transportation. Imagine that we have a small town in the middle of the prairie. It's relatively self-sufficient, but also isolated. It has an economy that is functional, but is limited in its ability to grow. If tough times hit this little town, there are few other options for its economy. So, the residents build a wide, paved road that connects their town to nearby highways. Now, their citizens can go to the city for work, it's easier for people from the city to come and shop, and the movement of products in and out of the small town is much easier. Transportation helped this town's economy become stronger and more complex.

That same idea can be applied to larger regions. Transportation helps connect consumers and producers with each other and with a wider range of markets. A region with better transportation can move goods and people more easily within itself, can more easily import goods and people from other regions, and can just as easily export its own goods. Transportation means options, and that's good for an economy.

Transportation lets regions interact with larger markets
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However, there is a risk here. Imagine that our small little town didn't build a road to connect it to other markets. Imagine the town built an airport. The cost of the airport would likely be greater than the benefits the town would receive, since not many people are going to fly into a town that isn't well connected to other cities. When considering transportation, planners need to be aware of how various networks will be used.

For example, in colonial times the British Empire would put great efforts into connecting its colonies to international trade networks. Ports like Boston were important transportation centers that got resources out of the colonies and to Britain. This was great for Britain's economy. However, when the British were kicked out of their colonies, the former colonists found that they had no transportation infrastructure to support local economies. All of their transportation was based around supporting the economic development of one region only: Britain.

Communication

Just as transportation can fundamentally impact the economic development of a region, so can communication. Communication leads to more efficient markets because the ability to exchange information is a big part of economic exchange. Consumers want to make educated purchasing decisions, and producers need people to know why their product is awesome and where to buy it.

Let's go back to our little town in the prairie. The residents build this nice new road that connects them to local highways, but their economy has not flourished. Why? One reason may be that nobody knows they're there. By investing in signs along the highway, getting websites for town businesses, and talking with advertisers, producers, and consumers within other markets, this little town could actually start attracting business. Better communication not only brings people into the town, but it also lets people within the town interact more efficiently with each other.

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