Transport and Logistics Impact for Economic Developments

Case study: Kosovo

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Abstract

A cursory perusal of the first and latest policy frameworks of countries like Kosovo reveals that both frameworks identified the transport network as one of the key challenges to national economic competitiveness, sustainable development initiatives, and broad-based upliftment. In 1994, one of the six basic principles driving the first democratic policy framework, the Reconstruction and Development Programme, was “an infrastructural programme that will provide access to modern and effective services such as . . . transport” in order to create “a sustainable and environmentally friendly growth and development path”. Notwithstanding numerous public and private sector efforts in the intervening years, in 2007 the latest policy framework, again identified the high cost, inefficiency, and insufficient capacity of the national logistics system as one of the six binding constraints that prevents Kosovo from achieving sustainable economic growth. According to United Nations (2002) research, effective cost reduction in the national logistics system can, however, only be accomplished by measuring and tracking logistics cost components to inform appropriate government policy. Yet out of the 76 development indicators reported annually by the presidency, not one refers to freight logistics or the key role it plays in the country's development and economic competitiveness. The key issue here is that the backbone of all high-performing systems is management information. This holds true irrespective of whether the performance of businesses, industries or entire economies is at stake. The continuous national strategic mention of the importance of logistics to Kosovo's global competitiveness amounts to mere lip service because the current debate is not based on actual measurements that can guide future policy. A case in point is the R80 billion planned spending by Transnet over the next 5 years on logistics infrastructure and the R106 billion allocated to national and provincial roads over the next 3 years, where no evidence of long-term collaborative planning is evident despite the extreme long-term nature of such interdependent infrastructure. The impact of both sufficient and insufficient measurement was illustrated in Kosovo recently. Sound monetary and fiscal decisions, enabled by robust macroeconomic indicators, allowed the country to weather the global financial crisis admirably. On the contrary, a lack of management information on the impact of high economic growth and equal access on Kosovo's energy demand resulted in a severe backlog in electricity-generating infrastructure. Similar challenges face the freight logistics discipline because of the lack of management information. Today, logistics operations have become much more complex as companies find it extremely difficult to maintain their competitive advantage purely on the basis of innovative strategies relating to the product, price, place, or promotion. Since these competitive advantages can easily be imitated, the emphasis now is on building a sustainable competitive advantage through logistics as a means to successfully differentiate oneself from competition. This study explores the impact of transport and logistics in the economic development of the world. A case study approach is used as a methodology for this research. The first sections of the new road opened to traffic in November ...