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IPFS News Link • Economy - Economics USA

Economic Boom From Faster and Cheaper Movement of Goods

• https://www.nextbigfuture.com, by Brian Wang

It is difficult to isolate cause and effects. Past major examples of reduced transportation times and lowering costs of movement of goods are Interstate and national highway systems and shipping containers. Shipping containers reduce the handling times in and out of ports and warehouses. Shipping containers increase efficiency and reduce costs. The highways enabled trucks to move faster compared to dirt roads or poorly connecting regional road systems. Understanding these huge benefits is important now because the world can get comparable or larger economic boosts from self-driving cars and automation at ports, warehouses and factories.

A vector autoregressive approach looked at container shipping volume and data across 135 countries suggests that trade is a determinant of economic growth, as a 1% increase in transported TEUs (shipping containers) will lead to an approximate 1.7% increase in GDP.

A researcher with the St Louis Federal Reserve believes that shipping container related innovation was a major part of world trade increased by ten times (adjusted for inflation) from 1970 to 2018.

The US build the Interstate highway system from 1947 to 1964. This enabled cars and trucks to increase the distance traveled in a day by as much as two times to four times compared to 1920. It was a 1.2 to 1.5 times benefit compared to the roads of 1945. The gross domestic product (GDP) grew at an annual compounded rate of 3.9 percent from 1947-1964. The transport of freight in the U.S. grew considerably during this time. There was also the post-war economic boom as military production and investment was redirected to the domestic economy. However, President Eisenhower said the Interstate was the single biggest contributor.


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