Transportation sector principally works to provide services between spatially separate locations and as such their role in economy can be presented based on how they connect businesses with their suppliers, customers etc. at the household level, transportation sector connects people to places of work, to places like shops, recreation and medical facilities where they spend. Apart from these two elements, transportation also can be considered as an economy in its own right, as transportation infrastructure provisions and operations alone contribute to the national GDP. The subway system of England being a part of the transportation system of the country is hence both an economic system of its own, and it supports aspects of the macro economy.
Large cities are expensive and congested. However, it is identified that it is in these large cities that there are major economic opportunities. In terms of worker population, market opportunities and collaborations with customers and others, larger cities offer for much more opportunities. Smaller cities on the other hand are usually well connected in terms of transportation but might suffer in the lack of opportunities. Asa UK City Growth Commission in 214 states, “Conversely, small cities can be more affordable and convenient in transport terms, but they are constrained in scale of opportunity. Different sized cities with different opportunities and constraints offer a blend of advantages and disadvantages to people and firm throughout their lives and business cycles” (City Growth Commission, 2014, p. 8). Transportation in the form of the tube helps connect both.
The economic importance of the transportation industry can thus be assessed from a macroeconomic and microeconomic perspective. In the macroeconomic level, analysis has been carried out with respect to how transportation affects the entire economy. Transportation affects the national economy in the way its mobility links to and affects levels of output, employment and income within the economy. In developed nations, the transportation sector contributes to somewhat more than 6 and 12 percent in GDP. In a comprehensive level, inclusion of the logistics costs and expenditure that go into it, it could be said that transportation contributes to somewhere around 25 percent in GDP even. An understanding of the transportation sector and how it contributes to the economy is hence a significant aspect to assess. At the macroeconomic level, the contribution to GDP, real GDP and more are assessed. At the microeconomic level, it is linked to the costs associated with the producer, the consumer and the production. There are many sectors contributing to the local economy, and transportation has been a single most thing that connects these different sectors and this makes it an interesting study. Studies show that for almost all large level sectors, irrespective of the work they do, transportation forms a major part of their costs. High income levels are associated with the share of transportation costs associated with each sector. On an average even for the individual income level assessments and expenditures, it is identified that transportation will account for expenses in 10 and 15 percent. An average user of public transportation could hence end up spending as much as 10 and 15 percent in transportation. The figure could vary based on the person making use of the transportation, the sector they belong too, etc. Now understanding these costs associated with the transportation sector could be a very crucial way to control it, too. The subjective influence of costs and the transportation sector development lead to better efficiency of us, and at the same time assure the connected economic benefits. The transportation sector, as with any other develops through a long period of time, with ideas, research and development and implementation. This work analyzes the impact of subways system on UK economic growth by taking into consideration, the way revenue is generated within the system, and how economic contributions are made in a direct and indirect manner because of the system. The economic impacts of the system in the form of knowledge development, ideas and implementation are assessed with the Romer model.