Research Paper on "Policy Analysis on the United States Transportation"

Research Paper 15 pages (4154 words) Sources: 1+

[EXCERPT] . . . .

Privatizing China's Transportation Infrastructure

The 21st century has been called the "Century of Asia" and China is clearly leading the way. Over the past 30 years, China has increasingly shaken off its state-controlled economic model in favor of a free market approach. As a result, China has experienced an unprecedented period of economic growth that has been met with a corresponding increase in the need for an efficient transportation infrastructure that is currently straining under the pressure. Economists have consistently cited the need for an efficient transportation system as part of a country's overall economic development needs and China is certainly no exception. Indeed, the need for an efficient and modern transportation infrastructure has never been greater than today, and policymakers in China are struggling to identify ways to keep pace with demand while providing the maintenance needed for the country's existing vast, but unconnected network of highways, waterways and railways. Some authorities argue that a national transportation infrastructure should be funded by governments, others advocate a privatization approach, and still others recommend a combination of these approaches. In this environment, identifying opportunities for using scarce resources more effectively in developing a nation's transportation infrastructure represents a timely and valuable enterprise. This study provides a review of the relevant literature to determine the pros and cons of a privatization approach to the development of China's transportation infrastructure, followed by a summary of the research and salient findings in the conclusion.

Table of Contents

Introduction

Background

Pro-Side of the Arguments in Favor of Privatization

Con Side of the Argument against Privatization

Conclusion

The Pros and Cons of Privatizing China's Transportation Infrastructure

Introduction

Although there is widespread agreement among economists that a modern transportation infrastructure is needed as part of a comprehensive economic development approach, there is less agreement concerning how the resources needed for such an infrastructure should be acquired and managed, particularly in newly industrialized nations such as China. While China has increasingly embraced free market economics in recent years, much of the country's economic development remains state-controlled and progress in some areas has been slower than in others. Some analysts have suggested that privatization represents a viable alternative to governmental development of a nation's transportation infrastructure through the use of private ferries, toll roads, toll bridges and so forth while critics argue that privatization opens the door to favoritism in contracts and the location of new construction projects. Whatever the source of the resources needed for the continued expansion and modernization of China's transportation infrastructure, it is clear that the country is already bursting at its transportation seams and an enormous amount of investment is going to be required in the near-term in order to keep pace with the other economic and infrastructure developmental initiatives taking place across the country. To determine the pros and cons of a privatization approach to the development of China's transportation infrastructure, this paper provides a review of the relevant peer-reviewed, scholarly and governmental literature followed by a summary of the research and important findings in the conclusion.

Background

Wherever the resources come from for it development, a modern transportation infrastructure is an absolutely essential element that is needed for economic development [11]. Given its sustained and rapid economic growth in recent years, the need for a modern transportation infrastructure in China has never been greater. Over the past three decades or so, China's economy has undergone a transition from a centrally planned system that was mostly closed off from international trade to a more market-oriented economy that has helped create a burgeoning private sector and the country has emerged to become a major actor in the global economy and international community [2].

The economic reforms that began during the late 1970s have helped fuel the need for an improved and expanded transportation infrastructure throughout China but there has been a dearth of uniform planning involved that has resulted in some parts of the country receiving the lion's share of transportation funding while less accessible regions of the country remain underfunded [2]. Even the economic reforms that are not directly tied to the country's transportation infrastructure have created a new need for an expanded and improved system of roadways. For example, U.S. government analysts emphasize that China has managed to weather the recent global economic downturn better than most other countries, there has been a cost involved: "The Chinese government faces numerous economic development challenges, including sustaining adequate job growth for tens of millions of migrants and new entrants to the workforce [and] reducing corruption and other economic crimes" (p. 3) [2]. These two constraints to economic development have direct implications for the direction and approach that will likely be required to achieve the country's goals in the future. In this regard, analysts with the U.S. government add that, "Economic development has been more rapid in coastal provinces than in the interior, and approximately 200 million rural laborers and their dependents have relocated to urban areas to find work" (p. 4) [2].

While the national Chinese government managed to weather the recent economic storm better than others, the country has not been immune to its lingering effects. In response to a downturn in the demand for the country's exports in 2009 that has driven its economic growth in recent years, Chinese policymakers have established a high priority goal of improving domestic consumption among the country's growing middle class to lessen dependence on foreign exports as a component of its GDP in the future [2]. Clearly, an improved and expanded national transportation infrastructure is imperative for this goal to be achieved.

Although China's transportation infrastructure is vast and the country features the largest system of waterways in the world and a national highway system second only to the United States, other aspects such as the nation's highways remain underdeveloped [2]. This lack of adequate highways in particular has hampered China's efforts to modernize its economy and provide more equitable opportunities for all of its citizens [7]. Indeed, in some ways, China's current efforts to modernize its transportation infrastructure are analogous to those that took place in the United States in the years immediately preceding and following World War II when the nation's need for an interstate highway system, a growing middle class and inexpensive automobiles created a demand that had to be filled in some fashion. According to Mackenzie (2002), "As funding for China's urban health care system continues to be linked to the official urban population level, the floating population lacks access to the cities' hospitals, doctors and pharmacies. One consequence is that many migrants are not immunized against infectious diseases, so worksites and living areas populated by migrants are susceptible to frequent epidemics. Only those fortunate enough to land jobs with state-owned enterprises are likely to have any form of health coverage" (p. 306) [6]. The lack of inexpensive transportation, though, has also adversely affected the ability of migrant workers to gain access to more meaningful employment opportunities that may exist in more distant parts of the country [6].

Economists have consistently cited China's enormous size and rugged geographic terrain as being ponderous challenges that are daunting in terms of the amount of money that is going to be involved in expanding the country's transportation infrastructure as well as how such initiatives are going to be funded. In this regard, Frewen (1999) emphasizes that, "With more than one fifth of the world's population and vast stretches of inhospitable terrain, China poses a complex distribution challenge for today's business managers. Estimates suggest that poor transportation links contributed to the loss of nearly one percent of China's gross domestic product (GDP) each year" (emphasis added) (p. 12) [4]. These estimates, of course, do not take into account the developmental opportunities that were lost because of a paucity of an adequate supporting transportation infrastructure nor do they take into account the effects of the continuing underemployment of tens of millions of the nation's migrant working class.

While there remains a dearth of relevant studies concerning ongoing efforts to modernize China's transportation infrastructure, some indication of the priorities that are involved can be gleaned from some recent reports. For example, according to Crawford (2009), much of the transportation infrastructure development taking place in China is directly tied to fossil fuel-based transportation such as automobiles and trucks that require an efficient network of interconnected highways, a feature that has not been lost on climatologists who cite the energy-hungry needs of the growing Chinese economy as contributing to the piecemeal fashion in which the transportation infrastructure is currently being developed [3]. In this regard, Crawford notes that, "China has been among the loudest 'developing' nation voices insisting that 'developed' nations should not be allowed to inhibit their carbon emissions until they reached a comparable stage of development, even as their carbon emissions soared. However, such emissions come at a cost, typically for the most politically, socially and economically disenfranchised members of those societies" (p. 212) [3]. As noted above, this category of citizenry in China includes a… READ MORE

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