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Focus on Policies

Eleven policy issues described here together provide a checklist for deepening the policy agenda of the transport business strategy:

  • rationalizing public and private sector roles in transport delivery;
  • improving the performance of state-owned enterprises;
  • preserving the value of public assets;
  • setting transport prices;
  • encouraging private sector participation;
  • fostering competition and strengthening regulation;
  • making transport more inclusive;
  • improving transport safety;
  • combating transmission of HIV/AIDS;
  • reducing transport emissions;
  • and fighting corruption.

Although countries will inevitably weigh and analyze all of these issues differently, how decision makers resolve them into enforceable policies and implement them through institutions and regulations will be crucial to the sustainability of the country’s transport systems. Bank Group support can help the transport sector put into practice the principles of economic, financial, social, and environmental sustainability and build systems that are cleaner, safer, and more affordable.

The goals of fostering competition and strengthening regulation underlie many of the recommended policies in the transport business strategy. Competition creates incentives to managers to meet market needs at the lowest possible cost, and it encourages them to innovate to obtain market advantage. Regulation protects public interests and can set parameters—for example, for energy efficiency or vehicle safety—that shape the response of competitive markets. To ensure that transport is safe and clean, regulations or other governmental interventions are likely to be required, whether assets are under public or private ownership. These policy measures can help to improve the access to transport services for those now underserved and most in need (rural women, the disabled and elderly, the poor who rely on nonmotorized transport). They can also help all transport users by raising safety standards to reduce the toll of traffic accidents, by requiring greater fuel efficiency and more controls on vehicle emissions to improve air quality and protect the global climate, and by combating corruption (such as informal payments to inspectors, traffic police, or customs officers), which can facilitate dangerous driving, unsafe vehicles, noxious exhausts, or vehicle overloading.
To ensure that transport is affordable, competition among private suppliers is likely to lead to the greatest efficiencies, with governments contracting for specific services. The traditional model of supply by state-owned enterprises controlling infrastructure and fares has not always served the poor (or anyone else) very well. Monopoly supply has often meant that costs have been higher than they need be and that services have not been very responsive to needs. Controlled fares have sometimes resulted in increasing losses for the public transport provider and progressive deterioration because of the inability to reinvest. The Bank Group believes that governments may benefit from assessing new models of delivery and pricing (such as those involving public-private partnerships, output-based contracting, user taxes on fuel consumption and traffic congestion), which may offer better and more affordable service per unit of subsidy. The key is to capture through competitive means the benefits of private sector efficiencies in the delivery of public services.

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