But, why do Economists Forecast future growth in Transport?

The main reason why Economists forecast future transport demand growth is so that limited resources can be provided for the construction or purchase of our long term transport needs. For example an extra road lane, more buses with higher capacity or more airports due to increases tourism. It also allows us to make financial decisions. For example bow the government will find the money to finance these improvements. Should they start saving now by making cuts this year or next year? This is an example of the instrumental questions data from the forecast can help to answer. It’s extremely important that estimations are made early considering the time and planning needed to develop the previously suggested infrastructures.

If Economist fail to plan for rises in future demand, the current infrastructure will be inadequate so as a result serious congestion will occur. Such events are not ideal for firms as some goods have strict periods in which they have to be transported or goods will become unmarketable. Examples include fresh fruit and takeaway meals. Therefore delivery delays could potentially increase cost, making goods more expensive (inflation) to both domestic and foreign consumers and therefore less internationally competitive. This can worsen the current balance of payments position which is already in a deficit. Therefore it’s absolutely essential that the transport system is appropriate. Also increased prices will make real incomes fall, so the level of potential consumption will fall therefore the quality of life will drop too. As a result incumbent politicians are unwilling to make such mistakes as it can persuade citizens to vote elsewhere. 

Lastly forecasting is important for global warming reasons. This is because expected transport behaviour in the future can be used to judge possible carbon dioxide emissions amounts, so allows plans to be drawn that is most effective in trying to reduce these unwanted emissions that result in negative externalities. This is important especially since countries are now under increasing pressure from green campaigns and the European Union. The European Union plans to impose expensive fines on members who produce excessive emissions. Emissions can't be dealt appropriately in the future if we don't know information about the future now. 

Good future demand predictions for transport can stimulate transport investment from firms due to improved business confidence and the worry of being inadequate to meet consumer demand, therefore the inability to make maximum profit. This surge in investment can result in short term economic growth as unemployment will fall and possibly even more due to the multiplier effect.

Lastly I must add that forecasts are simply predictions about the future, which may not be true due to the complex nature of the economy. Therefore major financial decision shouldn’t be made solely on this. Also the question doesn’t specify which country or type of transport. Forecast will be used and predicted in different ways. For example in 3^rd world countries, even if transport demand is expected to increase, infrastructure can’t be paid for, as Healthcare for example will be considered more important.

Soooo, how do Economists forecast future growth in Transport?

Transport Demand refers to demand for all transport goods and services such as cars and train journeys. This can be estimated in many various ways such as through extrapolating, surveys and statistical models. The reason why this is done it so that there's adequate transport structure to meet the needs (demand) of citizens in the country but this question may relate to transport demand in a global perspective for which the same idea holds true.

In many western countries such as the United Kingdom over the century data has been collected on transport demand. This includes transport modes such as Canals, Bikes, Trains, Rail and Planes. In addition rough estimates are known about the amount of users for these transport types. This data is usually shown on graphs, using these graphs economist can extrapolate by drawing a line of best and can make future predictions using this.

Similarly Economists can forecast demand for Transport by analysing previous trends and predicting using these, as this show the behaviour of the transport demand over time, therefore this is a very beneficial method. In particular trends relating GDP and Demand for transport demand will be even more helpful as this can show trends in regard to economic cycles and the notorious boom and bust periods.

Another way transport demand can be forecasted is by checking forecast for GDP growth, which could possibly identify demand declines which can be caused by expected high fuel prices in the future or prices of vehicle components. The decline could be caused by major technological advances such as the internet, which has discouraged derived demand for travel as consumption can now be done conveniently by consumers at home. However the fall in consumer travel demand can possibly be replaced by an increased travel demand from firms, who now as a result of the internet make more deliveries.

Another way forecast can be made is by questioning transport users about their expected future behaviour by conducting surveys which are representative, so reliable and valid data can be obtained. Statistical models utilising variables, such as interest rates, inflation rates, unemployment can also be created which will again take advantage of valuable past information and trends.

Economic Break: Short Story of mine, called The Turning Point

The Turning Point

The metal froze my hands. It was a lot heavier than I imagined. I felt a million times more powerful than I did a few seconds ago. Using this weapon I controlled the world. I decided who lived. And who didn't. The firearm was pitch black and pocket sized. I couldn't believe it, I have been fantasying about this moment all my life. My heart was pumping like a machine as my hands wrapped around it. My eyes were bewildered as they refused to look away from the delicate piece of art. From the reflection on the car bonnet I could recognize the birth of a smile on Don's dark repulsive face behind me. All those who knew him knew this was a very rare event.

"You make sure you take care of that" Don ordered in his usual low tedious tone. I knew him to well to know not to answer back. That would only anger him. The animal stood 6 feet 5 with broad long shoulders with the characteristics of a monster. He was always in a bad frame of mind and had a very, very short temper. His face was small and had disproportional eyes which acted like surveillance cameras. He had the appearance of a professional body builder which disturbed the public and his many enemies. He had muscles on every part of his body, with no traces of fat or weakness. Don was the leader of the notorious Gorilla gang; which protected the interest of black people in Manchester from the racists. He was a big brother to all the new members. Like me.

Losing patience Don ushered me to the exit of the car park. I was puzzled on where to put the gun so I put it under my trousers just as they did in the films. The gun was a few centimetres away from my right testicle. We trailed down the bitter road with its derelict shops evidence of the poverty in south London caused by the recession. We continued walking in a dangerous silence careful not to leak any information to any people passing by. Each and every one seemed fairly smart in their expensive suits and shiny shoes which reflected the light from the street lamps. Don and I were easily noticeable as we were clothed in our tarnished school uniform and were pacing in the opposite direction as if we were time travellers. At the end of the road we parted, no words were necessary because Don's wicked brown eyes were self-explanatory. I treaded nervously to my house. With each step my imagination ignited with new ideas on my new potential due to my possession of the GUN! Finally I arrived at my destination and the daily search for my keys began. As soon as I stepped into the hallway, I was in a hurry to get to the security of my room at the top floor. I tried my best to avoid confrontations with my younger siblings and parents.

'Hi rich, how was school today?' my mum quizzed from the top of the staircase as she caught view of me.

"Great" I lied. I gained a record ten negative comments, but my mum would never suspect her precious son of being a class delinquent.

"Why are you two hours late from school?" she questioned in an inquisitive tone.

Sweat trickled down my head despite the fact that it was winter as a result of the unexpected question."I was at the library" I muttered as I helplessly lied again. When I jogged up the stairs past my mum, I couldn't stop visualising the Gun dropping from my waist and falling into my mother’s vision. She’d go ballistic. Finally I was in the safety of my room and without delay locked the door to remove the possibility of someone intruding as I examined the artillery. The gun was perfect and it felt as if it was deliberately crafted for my use. The gun was identical to the pictures/posters on my bedroom walls. I was hypnotized by the precise curves and durability. It was solid and seemed as if it was going to last eternally. The object became best friend. I played with it all evening like a toddler with a teddy bear. It sat beside me on my pillow like a spirit, protecting me as I drifted to sleep.

I woke the next morning to loud knocking on my bedroom door. I froze. Immediately opened my eyes and instantly recognized the gun lying beside me. I was thankful it wasn’t a dream. “Richmond get up for school!” my Dad bellowed from the other side of my door. I breathed a sigh of relief. I quickly shot out of bed like a bullet and put the gun in by backpack.

A few minutes later after my bland breakfast, I was out of the house, with the gun in my thread less backpack. I couldn’t risk leaving it at home. It was so cold; it was at times like this when I wished I was back in Ghana where I belonged. The sun was content on radiating Africa, that’s why I loved it so much. It seemed so long ago since my family fled to Notting Hill after the coup d'état in 1966, but it merely a years ago. I remember when I first saw my estate I thought it was hideous. The old red bricked building was uncomparable with my father’s beautiful parliamentary house in Accra. Anyways the secondary school I half-heartedly went was only a couple streets away from my flat. The school was centuries old and was evident by the aged, wrinkly teachers and it’s unmaintained, cheap structure. It accommodated a predominantly white population no black people, apart from me. It wasn’t long before I went through the corroded red gates of the atrocious place. It was known by most Londoners as Hell but the worn-out yet energetic teachers insisted it called Westminster city school. Almost immediately after entry I was bombarded by people like a popular Politician, like my Dad when we were back in Ghana. Only they wanted me dead. Instead of cameras and flashing lights in my direction, there were empty cans and flying salvia. Instead of them making me feel pleased with myself, they made me feel like the pink gum beneath their expensive kickers. Instead of joyful screams from jubilant souls, there were insults from deep within solid frozen hearts. Instead of smiles on angelic faces, there were satanic frowns on demons like faces. This wasn’t bullying. This was torture. Welcome to my world. I screamed for help from the pits of my body, but remain unheard due to the chants of the entire school.

“Poor man, poor man, poor man!!” I was clearly resented. I strutted in my aged tatty cloths which were too small for me. My trousers ended at my knees and my shirt was unbuttoned because it couldn’t fit around my upper body. My toes were bursting out of my shoes, they were more like slippers than shoes, and they provided no comfort whatsoever. Back in Ghana I had all the nicest, latest cloths if only i could somehow drag them past and show my relics. Only God knew how much I despised my life now. I rushed quickly as I could to the entrance of the institution which was just as chaotic as the playground. Today was going to yet another dreadful day. On top of having double physics and then double biology I had double Maths. I whole heartedly loathed my maths teacher Mr. Wise, to an extent that I wanted to eradicate him. He was just as bad as the students as He constantly insulted my inadequate mathematical skills throughout the lesson.

After biology I was frustrated as I discovered I was graded an “F” for last terms test. Last week I gained the same grade and my Dad went ballistic, the bruises from the event are still visible on my fragile black skin. I just wanted get away from everything and be alone with the gun. So I went straight to the reeking toilets, where I normally spent my lunch times in exile. On my route to the furthest cubicle, I accidently bumped into an enormous year 11 student. Obviously he didn’t think it so, because he started to repeatedly punch me in my stomach and head as if he were a professional boxer. The blows were highly impacting on my skinny body.  I was defenceless.

“Stop............... Please............ Stop.......... Please............... Stop................ Please.”

I begged but the machine was too intent on causing more damage on my brittle bones. I struggled to keep my balance consequently I landed on the filthy floor whilst he towered over me. He looked furious. His saliva landed on my face like rain drops when he spat at me. He then walked off as if nothing had happened. I must have gone into a coma, because I have no recollection after he left. Eternity later I started the effort to try and regain my strength. When I stood up, I caught sight of my face in the broken mirror on the wall. It couldn’t have been uglier. My face had countless bruises with blood trickling from them. In addition to my faults my eyes had swollen too. I didn’t care anymore. I staggered out of the toilet to my maths lesson through the empty corridors.

I walked in five minutes late into the Mr. Wise’s. Expectedly Mr. Wise pointed this out.

“Ahhhh look what the cat dragged in.” The idiot exclaimed through his bright pink lips, as my peers burst into an energetic laugh.”You have a detention “. I was too tired to argue.. aroma was evident as people held their breath as I stumbled pass them and took my lonely seat at the back of the spacious antique classroom. Mr. Wise was strangely tall man with a small head covered with dirty blond hair, a long nose and beady eyes. He had a skinny body which was hidden under the vast amount of layers he wore. Whilst he supposedly taught the class I couldn’t stop thinking about the gun. I was urging to touch its nude body and feel its power again. Irresistibly I gradually reached into my backpack and grabbed the gun, then cautiously transferred it to my ripped blazer pocket. Then I closed my eyes and caressed it, like it was the body of a super model.

“Richmond stop day dreaming this instance. Come up here and show me and the class if you’ve actually learnt anything this year.” Mr. Wise wickedly smiled from one ear to the other like a clown. However I was the reason why the class burst into laughter again. My Heart froze. Everyone’s eyes were on me. I wanted to breathe my last breath that second. “Well come on then” he urged. I slowly stood up and limped to the front of the room like a cripple, I still didn’t have enough time to figure out the solution to the stupid equation. I stood there staring so deep into the white marks; I think I saw its atoms. Behind me I could hear snickers of laughter as I unsuccessfully attempted the question. The questions weren’t like the questions I’d easily do at my boarding school in Ghana.

“You are useless Richmond Odonkor!! USELESS!!” Mr Wise said. The words burned my soul. I began to shake uncontrollably. “You can’t even do that”. The room had fallen silent. Until a white boy in the second row called Mark started the chants. They all joined in one by one. Shouting:

“Loser, loser, loser, loser, loser, loser, loser, loser, loser, loser”. They repeated the words again and again like a scratched CD. I couldn’t take it anymore. I was about to burst. I turned around and watched my enemies all thirty one of them. No one, not even Mr. Wise made an effort to stop the hooligans. He just stood stationary in front of me.

“Stooooooppppp” I screamed at the top of my voice. They didn’t. The next thing I did definitely made them be quiet. I pulled out the firearm. There were gasps from every corner of the room. I was in control. The look on Mr. Wise’s frantic, distraught face was priceless. I lifted the gun to his hideous face. I so wanted to pull the trigger. And watch his brains splatter on everyone. A tear drop trickled from his eyes like a faulty tap. I smiled. For once in my life I was the person laughing.

What exactly are the determinants of Rail Passenger demand?

One determinant of rail passenger demand is price, because the price of the transport mode affects the consumption of other goods. If consumers have to spend more on rail, then they’re less to purchase other goods that they actually want, since demand for travel is derived. This means consumers don’t actually want travel, but realise they have to consume it, if they want to consume other goods. If prices for rail become too expensive, it will take a higher proportion of the consumer’s income, therefore they’ll switch to another transport mode such as Car travel, example of the substitution effect.

Another important determinant of rail passenger demand is speed of travel as this directly affects the duration of the journey. Especially in this day and age, people are very time conscience, as time spent travelling could be used instead for leisure activities. As a result of this consumers want the fastest mode of transport within their budget. If rail journeys are too lengthy, then consumers will switch to other alternative modes.

The availability of alternatives is a major determinant of demand for rail. The more substitutes there is, the more elastic the price elasticity of demand will be. This is because consumers will be more sensitive to price changes as they can just use other types of transport, again the substitution effect. Why would people take rail, if they could easily take their car, which allows them more flexibility and space?

The quality of the rail service has to correspond to consumer preferences. For example if the trains are unhygienic, this makes people more susceptible to unwanted diseases. Therefore I’d expect demand to fall. If trains ware reliably clean then demand will be high as this factor is important to consumers.

UK Takes another turn for the Worse

First Post:

Every time I switch on the TV, I’m bombarded with information about how bad the UK Economy is. But what does it mean and how does that have any effect on us.

The UK’s trade deficit has increased from £1.7 billion to £4.2 Billion which is a 147% increase according to the Office for National Statistics.

If you’re any kind of s student you may asking yourself what is the Trade Deficit. Well it’s simply a description of the Country’s balance in Payments Account, which records the difference in the values of good imported (bought from other countries) and goods exported (UK good sold to other countries.  For the last thirty years or so, the UK has had a Trade deficit which shows we’re consuming more import goods then we ought to, simply because we aren’t exporting enough. The money to finance the trade deficit has to come from somewhere so we now owe billions of pounds to countries such as China and Japan which we have to pay in the future for the Goods we’ve bought such as our electronics  and clothes. This debt is another worry on top of the UK’s Budget deficit which was caused by the excessive spending from the Government on our behalf. These debts are accumulating day by day in the millions as the interest builds up and we have to pay it one day!! So the more we consume now, the less money will have in the future to consume.

You may be wandering what is the big fuss about the trade deficit…. Well there are reasons for and against this. For example:

- It’s not  hugely important problem because nearly all other European countries have Trade deficits too. Really only industrial giants such as Germany and Russia have trade surpluses, so instead of owing money to other countries, other countries owe them money. Also the debt works out be £70 per person, which isn’t much at all.

- However as I said before we can’t continue building more and more debt because like all debt it has to be paid back. It’s as if the country has completely maxed out on all its Credit card. If we don’t pay, someone else will and this could be our children or even possibly our grandchildren. Therefore I think there should be more concern about this issue not only in Parliament but elsewhere in the UK too, people should be more aware of the country’s financial state.

We are the Citizens, we are responsible for it.

Rich Amoah

Economics Editor