The impact of transport on regional development in Indonesia : a case study of Province of North Sumatra.

Experiences from many countries show that transport can have conflicting results on
development. This is a question as to whether the provision of roads can stimulate
the centres to generate ripple and trickle down effects or whether they drain raw
material, capital, labour and entrepreneurial talent from surrounding areas. There is
also a hypothesis that if there is a relationship between capital formation and
economic growth, there must be a relationship between transport and the growth.
This study explore this phenonmenon in depth in the context of a case study of North
Sumatera in Indonesia.
Economic growth factors and traffic volume data were collated from different sources
covering the whole province of North Sumatera and were subjected to standard
statistical tests. Despite the deficiencies in the data base, the findings suggest that the
positive impact of roads on private investments, government activities and
interregional trade is significant although roads may stimulate the concentration of
investment and at the same time encourage interregional trade in the ports
surrounding the primate city. It is also found that roads do not have a significant
influence on the expansion of land use.
The findings also show that in this case, the provision of roads has an impact on
regional income but the speculation that the long term impact of roads leads to a
backwash effect from the less developed subregions appears to be true. Regional
inequalities may be reduced in some measure when all settlements in the region can
be accessed by vehicles in all weathers.
A simple model is . constructed to examine the relationship between the volume of
~raffic and economic growth factors. This model is based on the gravity model. The
/findings show that agricultural land use and population have significant contribution
to the generation of the volume of trucks and buses, respectively. Capital investment
influences significantly on the generation of the volume of cars and trucks. Despite
the level of significance, population makes the the smallest contributor to the volume
of traffic.
Due to data problems, the conclusions from this study must be drawn carefully. The
findings of this study therefore are more indicative than conclusive. Even though
they may indicate and permit an anticipation of the future role of transport, they
should be interpreted more as trends and tendencies than an absolute predictions.