This chapter describes how, it is well established that there is a strong correlation between economic growth and demand for transport. This is the case for both freight and passenger transport. Passenger traffic has income elasticity of demand a little more than unity, and freight traffic has an income elasticity of demand of about unity. What is perhaps less clear is the direction of causality in this relationship. On the one hand, it is possible to view transport essentially as demand that is derived from economic activity, or economic growth requires trade, and trade requires transport. Economic growth implies greater division of labor and spatial specialization, the development of new technologies requiring transport such as just-in-time, growth in commuting and business travel, and growth in the quantity of goods and services to be transported. At the same time, rising household incomes generate increased demand for travel, both leisure activities and for shopping. However, the demand for transport cannot be treated simply as derived demand. Increasing mobility is a precondition for increased productivity, and growth and improvements in transport may in themselves promote growth.
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