'What shall we give in return for so much?'-- The Wisdom of Exchange Incorporates into the Government Engaging in the Rural Transport Poverty
'What shall we give in return for so much? is the Queen's motto. This motto wishes their students can apply what they learned in return for society. However, this motto also implies a kind of wisdom in economic fields: wealth is coming with the exchange.
Rural Transport Poverty
Introduction
Sustainable Development Goals have been
formed by the UN in 2015. The content in SDG incorporates 17 goals to improve
the well-being of human beings. Significantly, ending poverty is paramount for
SDG to resolve within the 17 goals, because of its special attribute which
might be directly attached to the growing inequality in society and shown as
the root of the social conflict and resistance to world economic growth.
Moreover, poverty in most nations shows rural areas are more outstanding than
urban areas. Therefore, the government is prone to start from the rural
district when formulating institutional poverty alleviation plans.
“Rural Transport Poverty” is part of
poverty. In terms of this terminology, transport poverty is pointed to the
citizens who cannot satisfy themselves with the limited transport system
including the affordability of transport, unavailability or inaccessibility of
transport, time-consuming, etc. Essentially, limited transportation is quite
common in suburban areas with undeveloped local economic environments, low salaries,
and living standards of the human being there (Powell, J. & Keech, D.,2018).
Hence, focusing on transportation is one of the viable, direct, and effective
methods to improve poverty.
In this case, government plays an
important role in developing transportation. Transportation construction is
required heavy funds and clear-cut regulations, even after the commencement of
the project, this organization must also coordinate and supervise the
construction of this program until the end. In other words, except for the
governments, no other organizations or companies are competent in
transportation construction out of lacking convictions and executive force for
citizens, particularly in the aspect of raising funds and recruiting citizens
as employees. Generally, resolving poverty is the responsibility of the local
authorities, and each of their movements becomes pivotal to the development of
poverty.
The benefit for the government to improve rural transport poverty:
“Building the road is the first step to
becoming rich” is a dictum in China. Basically, reforming transportation
improves the flowing of the workforce and cargo. With regard to the workforce,
though the city center can provide higher paychecks and more employment
opportunities than the rural area, some of the primary sector’s industries like
forestry, husbandry, fishery, etc. are superior in the rural area in which
demand for the special talents to develop. In this case, the level-up of the traffic
system can facilitate the flow of labor and talents as well as significantly
improve both rural areas and the city center industry. Following is the cargo
flowing, the enhancement by the traffic system reduces the expenditure on transportation.
With the saving of cost and the improvement of sales volume, rural industries
are more obvious in the facets of the revitalization of the rural economy.
Except for the workforce and cargo, the
crucial strength of rural transportation is narrowing the information gap
between poverty and rich area. An information gap research published by Heski,
B. (2021) reveals the economic outcome based on Akerlof’s Lemons model in 1980 that
mentions asymmetric information refers to different information owned by each
person in the transaction. Under the economic outcome, it can be deducted to people
from wealthy areas are enabled to own more sufficient information than poverty
areas on most occasions. To be specific, useful knowledge and information e.g. distribution
channel, cost of sales, etc. are usually applied to local daily business transactions.
If an area businesses are not fierce enough, they might gradually choose to
neglect information before it becomes redundant for them. However, businesses in
developed economy areas need to own knowledge and information in order to
survive in the harsh competition. In this case, poverty areas are difficult to
keep information that coincides with the rich area, which straightly results in
the forming of asymmetry information.
As a business take a favorable position of
asymmetry information in economic activities, adverse selection might be caused
at the same time. Adverse selection refers to one party in market
transactions depending on the information disparity to benefit themselves while
the other party suffers. Hence, poverty areas businesses are incompatible to
make reasonable business decisions and fair transactions against the wealthy
area due to lacking efficient information, their money might gradually flow
into wealthy area businesses on most occasions. That is the reason poverty in one area might exacerbate by the enlarging of the market economy
more than ever before.
The improvement in the rural traffic system can change the current situation which is formerly mentioned. To be concrete, business dealing can stem from the attribute of exchanging. In China, there is a story called Feather for Sugar.
This story happened in the city of YIWU, which is the city known as the birthplace of small items which is "Made in China" and sell them all over the world. The story of the Feather for sugar is the root of all evil. Once upon a time, most of the citizens there are extremely poor, and vendors there will walk through the street, using brown sugar and rough straw paper to exchange chicken feathers which have higher profits. After the vendors acquire, they will sieve good-quality chicken feathers to make feather dusters and the poor-quality for fertilizing corn. Then, these vendors will take feather dusters for recirculation. The total process does not have any cash flow, all the transaction is processed by the commodities. As a result, some of the vendors held various kinds of commodities so that they can receive more information, and they can even use these commodities to exchange more efficient resources which they think so. Finally, some of them begin to operate grocery stores. At this moment, it is real-time for the formation of a capital market……
*The comparison between the past YIWU and now:
This story told us a meaning: maximizing the utilization of exchange can elevate profit. As transportation developed, goods can be more manufactured than before as well as the inventory and working capitals are no longer idle. As a result, the local economy is activated which is reflected in the workforce can get back more paychecks and have much purchasing power as well as the industry owners can diversify their business patterns through bigger selling volumes.
Besides, more business transactions with the improvement of transportation can also narrow the asymmetry information gap. According to Fiocco, R’s research (2021), dominant business suppliers have a tendency to keep Resale Price Maintenance in order to take advantage of their products and services to gain profits, and the ban of RPM can enhance the total welfare. In the rural transport poverty fields, poverty area business dealer is easier to become price takers. With the local businesses expanded, they might gradually break out of the monopoly, and the flows of cargo and information induce them to distinguish cost-effective prices rather than fettered by the RPM. What is more, they can also identify their competitive advantages, such as what kinds of products are needed by others, notably local specialties, and what kinds of products are more price competitive than others. That means the bargaining power of local industries can gradually catch up with the wealthy area as well as the businesses might work more smoothly than before. Ultimately, the purposes of coping with poverty can be approached after the improvement of transportation.
The existing problem of improving rural transport poverty in Northern Island:
The northern island government responded to the UN for the first time and published the rural development program (2014), which analyzed the recent existing problem of the Northern Island and revealed the rural economy becomes an indispensable factor to jack up the whole Northern Ireland economy.
However, the poor rural transport system becomes an obstacle that impacts the three main factors on the island: business industries, citizens’ well-being, and tourism industries. First, for business fields, the data show about 89% of Northern Island industries are suited in the rural area, but they gradually face challenges from the poor transport systems which leads to higher supply chain and energy costs in contrast to their business counterparts which are suited in cities. Following is the well-being of the rural citizens; the program proposed the limitation of the public transport service that reflects on the frequency and routes which brought extreme inconvenience to locals in getting access to necessary social facilities. In the meantime, poor transport systems rise suburbs’ household travel costs due to relying on private transport too much rather than public transport when they travel. Last but not least, poor transport systems have already inhibited the development of tourism industries. Tourism is one of the main industries driving the northern island economy. Until now, more than 40,000 jobs and over 6% of the workforce engaged in tourism. However, the poor transport access to scenic spots leading to the economic benefits brought by NI tourism is diminishing.
To recap, transportation output takes an
assignable part of business, tourists, and local citizens, especially for the
rising fuel price nowadays, improving
the rural poor transport system is imperative and might save the cost of the Northern Island people and synchronously decelerate the dispersing of rural
poverty to a considerable extent.
*As to the Current Government Policy, this part will be deployed by my groupmates
*We are on the same ship to solve this tricky problem together……😂
The further coordination of NI authority after the development of the Rural Transportation
After transportation development brings back
more profits and rewards to the individual economic entity. The NI government
can turn these rewards back through taxation. At this junction, how to settle
this revenue so as to direct the finance on the right track of the virtuous
circle is vital for the local authority.
To begin with, NI can set new guidelines
in accordance with the development of the local business. Although the
government has not participated in the market economy activities, it can employ
capital to assist the extant industries which are represented as the extension
or diversification of the single industry business pattern. Furthermore, the NI
government can also introduce or formulate new industries which might be suitable
for regional development by casting light on the local competitive advantages.
Subsequently, if the NI government should
further stimulate the economy and alleviate the rural poverty level, it cannot
solely rely on transportation. Simultaneously they should involve better
economic performance through fiscal and monetary policy. To be specific, fiscal
policy is particularly regarded as changing authority spending like delivering
higher poverty subsidies and workforce allowance than before. As to the
monetary, the NI authority ought to monitor the market and frequently adjust
the interest rate which can stimulate local consumption intermittently as well
as maintain a robust investment environment.
In addition, the NI government can also do
some public welfare activities by using the financial return to activate the
economy. Common expression forms like charity bazaars live commercials and
other series of activities that can exert government function should be fully
utilized for economic resurgence.
To sum up, the motto “a pound paid today
is worth more than a pound paid tomorrow.” is the main insight in driving the
economy. The economic prosperity of an area can be closely related to the local
capital flow as formerly mentioned. The authority should base on this to draft
different future programs as well as appropriately apply these rewards from the
accomplishment of improving transportation so that there would be more economic
gains in resolving poverty.
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(The end)
Reference:
DAERA – Rural
Development Programme Management Branch, (2021). United Kingdom - Rural Development
Programme (Regional) - Northern Ireland. [Online]. Available at: https://www.daera-ni.gov.uk/sites/default/files/publications/daera/Programme_2014UK06RDRP002_9_0_en.pdf
Heski, B. &
Ian, J. (2021). ‘Adverse selection, efficiency and the structure of
information.’ Economic Theory, 72(2),
pp. 579-614. [Online]. Available at: https://link.springer.com/content/pdf/10.1007/s00199-020-01300-1.pdf
Leda, B. &
Fiocco, R (2021). ‘Vertical Price Restraints and Free Entry Under Asymmetric
Information.’ The Journal of Industrial Economics, 69(4), pp. 854 - 899. [Online].
Available at: https://doi-org.queens.ezp1.qub.ac.uk/10.1111/joie.12272
Powell, J. &
Keech, D. (2018). ‘What Works in Tackling Rural Poverty. An Evidence Review of Interventions to
Improve Transport in Rural Areas’ Wales
Centre for Public Policy, pp. 5-10. [Online]. Available at: https://www.wcpp.org.uk/wp-content/uploads/2018/07/What-Works-in-Tackling-Rural-Poverty.pdf
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