A study commissioned by the APEC Policy Support Unit (2009:126) used a general equilibrium model to assess the potential gains from a 1% increased productivity of the transport sector in APEC economies. The increase in productivity has two key effects. First, it lowers the cost of distributing inputs and outputs (thus lowering their price). Second, it increases income and therefore increases the demand for goods and services. This increase in the level of goods and services demanded is offset, at least in part, by the reduction in the cost of delivering goods. The simulations were restricted to those APEC economies with relatively large transport sectors. In the developing economies, the combined effects of income growth and falling prices is substantial in Chile; China; Peru;, the Philippines; and Thailand – with income growth ranging from 7% for Chile to 2% in Peru, with average price falls of 2%. In the industrialized economies with extensive transport systems, income growth ranges from 1.3% in the US to 3.1% in Japan while price falls between 0.4 to 1.3%.