Skip to main content
SpringerLink
Log in

Influence of highway construction projects on economic development: an empirical assessment

  • Special Issue Paper
  • Published:
The Annals of Regional Science Aims and scope Submit manuscript

Abstract

The evaluation of transportation projects has traditionally been made by assessing changes in travel time, vehicle operating cost, and safety. The broader, long-term effects on economic development (job, income and business growth) are a concern of transportation planners and decision makers, but have often been overlooked due to the lack of a reliable impact-estimation methodology and/or data. This paper presents a quantitative tool that can be used at the project-development phase to estimate the economic-development impacts of different types of highway construction projects. Using data from Indiana, we develop models that can be used to estimate the effects of geographic location, accessibility, and other factors on the economic-development impacts of highway construction projects. Our models can also be used as a basis for programming and ranking a wide variety of highway construction projects.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Aldrich L, Kusmin L (1997) Rural economic development: What makes rural communities grow? USDA-ERS Agricultural Information Bulletin, no. 737

  • American Association of State Highway and Transportation Officials (2003) User benefit analysis for highways, Washington, DC

  • Anselin L (1988). Spatial econometrics methods and models. Kluwer Academic Publishers, Boston

    Google Scholar 

  • Anselin L, Florax R, Rey S (eds) (2004). Advances in spatial econometrics. Methodology, tools and applications. Springer, Berlin

    Google Scholar 

  • Arsen D (1997). Is there really an infrastructure/economic development link?. In: Bingham, RD and Mier, R (eds) Dilemmas of urban economic development: issues in theory and practice, pp. Sage, Newbury Park

    Google Scholar 

  • Aschauer DA (1990) Highway capacity and economic growth. Federal Reserve Bank of Chicago, Economic Perspectives, 14(5)

  • Bell ME, McGuire TJ (1997) Macroeconomic analysis of the linkages between transportation investments and economic performance. National Cooperative Highway Research Program Report 389, Transportation Research Board, National Research Council, Washington, DC

  • Boarnet M (1995). Highways and economic productivity: interpreting recent evidence. University of California Transportation Center, Berkeley

    Google Scholar 

  • Brigham Young University (2006) Assessing the economic impacts of transportation improvement projects. Prepared for Utah Department of Transportation Research and Development Division/Planning Division

  • Calspan-University of Buffalo Research Center, Inc. (2001) Handbook of economic development. Prepared for the New York State Department of Transportation, University at Buffalo, The State University of New York and Cambridge Systematics, Inc

  • Cambridge Systematics, Inc. and Bernardin, Lochmueller and Associates, Inc. (1998a) Economic impacts of SR 26 and US 35 corridor improvements. Prepared for Indiana Department of Transportation, Indianapolis, IN

  • Cambridge Systematics, Inc. and Bernardin, Lochmueller and Associates, Inc. (1998b) Economic impacts of US 31 corridor improvements. Prepared for Indiana Department of Transportation, Indianapolis, IN

  • Cambridge Systematics, Inc. and Bernardin, Lochmueller and Associates, Inc. (2003) I-69 Evansville to Indianapolis, Indiana final environmental impact statement. Prepared for Indiana Department of Transportation and Federal Highway Administration

  • Cambridge Systematics, Inc. and Bernardin, Lochmueller and Associates, Inc. (2004) Economic impacts of Indiana’s statewide long-range transportation plan. Prepared for Indiana Department of Transportation, Indianapolis, IN

  • Chow GC (1960). Tests of equality between sets of coefficients in two linear regressions. Econometrica 28(3): 591–605

    Article  Google Scholar 

  • Dalenberg D and Partridge M (1997). Public infrastructure and wages: Public capital’s role as a productive input and household amenity. Land Econ 73(2): 268–284

    Article  Google Scholar 

  • Duffy-Deno KT and Eberts RW (1991). Public infrastructure and regional economic development: a simultaneous equations approach. J Urban Econ 30(3): 329–343

    Article  Google Scholar 

  • Eberts RW (2000) Understanding the impact of transportation in economic development. Transportation in the New Millennium, Transportation Research Board, Committee on Transportation and Economic Development, Washington, DC

  • Economic Development Research Group, Inc. and Cambridge Systematics, Inc. (2001) Using empirical information to measure the economic impact of highway investments. Prepared for Federal Highway Administration, Washington, DC

  • Evers GHM, Van Der Meer PH, Oosterhaven J and Polak JB (1987). Regional impacts of new transport infrastructure: a multi-sectoral potentials approach. Transportation 14(2): 113–126

    Article  Google Scholar 

  • Fan W, Treyz F and Treyz G (2000). An evolutionary new economic geography model. J Reg Sci 40(4): 671–695

    Article  Google Scholar 

  • Federal Highway Administration (1992) Secondary and cumulative impact assessment in the highway project development process. Prepared by Federal Highway Administration Project Development Branch, Washington, DC

  • Federal Highway Administration (2000) Highway performance monitoring system (HPMS) Field Manual. December

  • Fernald JG (1999). Roads to prosperity? Assessing the link between public capital and productivity. American Economic Association, Am Econ Rev 89(3): 619–638

    Google Scholar 

  • Flyvbjerg B, Bruzelius N and Rothengatter W (2003). Megaprojects and risk: an anatomy of ambition. Cambridge University Press, Cambridge

    Google Scholar 

  • Forkenbrock DJ and Foster NSJ (1996). Highways and business location decisions. Econ Develop Q 10(3): 239–248

    Article  Google Scholar 

  • Forkenbrock DJ, Pogue TF, Foster NSJ, Finnegan DJ (1990) Road investment to foster local economic development. The Public Policy Center, University of  Iowa, Iowa City

  • Glickman NJ (1977). Econometric analysis of regional systems: explorations in model building and policy analysis. Academic Press, New York

    Google Scholar 

  • Hartgen DT and Kim JY (1998). Commercial development at rural and small-town interstate exits. Transp Res Rec 1649: 95–104

    Article  Google Scholar 

  • Huddleston JR and Pangotra PP (1990). Regional and local economic impacts of transportation investments. Transp Quart 44(4): 579–594

    Google Scholar 

  • Indiana Department of Transportation (1996) 1995 Indiana household travel survey. Indianapolis, IN

  • Isserman A (1977). The location quotient approach to estimating regional economic impacts. J Am Inst Plann 43(1): 33–41

    Article  Google Scholar 

  • Jack Faucett Associates (1991) the highway economics requirements system. Federal Highway Administration, Washington, DC

  • Kriesel W, McNamara K (1990) Improved measures of manufacturing attraction: The role of industrial site hedonic prices. Presented at the Annual Meeting of American Agricultural Economics Association, Vancouver, BC, Canada

  • Lombard PC, Sinha KC and Brown D (1992). Investigation of the relationship between highway infrastructure and economic development in Indiana. Transp Res Rec 1359: 76–81

    Google Scholar 

  • McQuaid RW, Greig M, Smyth A and Cooper J (2004). The importance of transport in business’ location decisions. Napier University, Edinburgh

    Google Scholar 

  • Moore T, Meck S and Ebenhoh J (2006). An economic development tool box. American Planning Association, Chicago

    Google Scholar 

  • Munnell A (1990). Infrastructure investment and economic growth. J Econ Perspect 6: 189–198

    Google Scholar 

  • Nadiri MI, Mamuneas TP (1998) Contribution of highway capital to output and productivity growth in the US economy and industries. Prepared for the Federal Highway Administration, Washington, DC

  • National Environmental Policy Act (1969) Project development. Prepared by Federal Highway Administration Environment and Planning Branch, Washington, DC

  • Pindyck RS and Rubinfeld DL (1998). Econometric models and economic forecasts 4th edn Irwin/McGraw-Hill

  • Pinnoi N (1993) Transportation and manufacturing productivity (transportation productivity and multimodal planning). Texas Transportation Institute, College Station

  • Quinet E and Vickerman R (2004). Principles of transport economics. Edward Elgar Publishing, Northampton

    Google Scholar 

  • Safety Management System Software (2004) Version v1.0 User Manual, Prepared by G. Lamptey, S. Labi and K. C. Sinha for Indiana Department of Transportation. Purdue University, West Lafayette, IN

  • Tarko A, Kanodia M (2003) Hazard elimination program: Volume 1—Research report, Volume 2—Guidelines for highway safety improvements in Indiana. FHWA/IN/JTRP-2003/19. Purdue University, West Lafayette, IN

  • Tarko A, Sinha KC, Eranky S, Brown H, Roberts E, Scinteie R and Islam S (2000). Crash reduction factors for improvement activities in Indiana. JTRP Final Report. Purdue University, West Lafayette, IN

    Google Scholar 

  • Treyz F, Treyz G (2002) REMI policy insight model documentation version 6.0. Regional Economic Models, Inc., Amherst, MA

  • United States Bureau of Labor Statistics (2004) Location quotient calculator–Year 2004

  • Washington SP, Karlaftis MG and Mannering FL (2003). Statistical and econometric methods for transportation data analysis. Chapman& Hall, New York

    Google Scholar 

  • Weisbrod G (2000) Current practices for assessing economic development impacts from transportation investments. National Cooperative Highway Research Program Synthesis 290. Prepared for Transportation Research Board, National Research Council, Washington, DC

  • Weisbrod G and Beckwith J (1992). Measuring economic development benefits for highway decision making: the Wisconsin case. Trans Quart 46(1): 57–79

    Google Scholar 

  • Weisbrod G, Grovak M (2001) Alternative methods for valuing economic benefits of transportation projects. Paper prepared for the Transportation Association of Canada, Benefit Cost Analysis Symposium

  • Weisbrod G, Gupta M (2003) Overview of state economic development highway programs. Prepared for the Federal Highway Administration, United States Department of Transportation, Washington, DC

  • Weisbrod G, Weisbrod B (1997) Assessing the Economic Impacts of Transportation Projects. Transportation Research Circular 477, Transportation Research Board, Washington, DC

  • Weiss MH and Figura R (2003). Provisional typology of highway economic development projects. Transportation Research Board. Transportation Research Record 1839: 115–119

    Article  Google Scholar 

  • Zellner A (1962). An efficient method of estimating seemingly unrelated regressions and tests for aggregation bias. J Am Stat Assoc 57: 348–368

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Civil, Construction and Environmental Engineering, Iowa State University, 450 Town Engineering Building, Ames, IA, 50011-3232, USA

    Konstantina Gkritza

  2. School of Civil Engineering, Purdue University, West Lafayette, IN, 47907, USA

    Kumares C. Sinha, Samuel Labi & Fred L. Mannering

Authors
  1. Konstantina Gkritza
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Kumares C. Sinha
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Samuel Labi
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Fred L. Mannering
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Konstantina Gkritza.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Gkritza, K., Sinha, K.C., Labi, S. et al. Influence of highway construction projects on economic development: an empirical assessment. Ann Reg Sci 42, 545–563 (2008). https://doi.org/10.1007/s00168-007-0183-x

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s00168-007-0183-x

JEL Classification

Search

Navigation