Taylor Jaworski, Carl Kitchens, Sergey Nigai, 01 November 2020

The interaction between domestic transportation networks, market integration, and globalisation is important for understanding the value of domestic infrastructure investment and weighing these against the substantial costs of building and maintaining domestic roads. Using an endogenous specification of domestic and international trade costs that takes into account the availability of the road network and congestion levels, this column estimates that the total value of the entire US highway system was $619 billion in 2012 dollars, which accounts for 3.9% of US aggregate GDP in 2012. The results suggest that decisions on how much to invest in domestic infrastructure should be made in conjunction with considering how improvements in the domestic transportation networks would affect domestic and international trade as well as distributional consequences for different locations within a country.

Emanuele Ciani, Guido de Blasio, Samuele Poy, 11 July 2020

Large transportation infrastructure projects are considered a promising investment to spur economic growth in lagging areas by many policymakers. This column presents historical evidence that questions this assumption. It studies the most important Italian infrastructure project in the aftermath of WWII: the 440km freeway connecting the Southern regions of Italy. It finds, that while the freeway caused a significant reorganization of both economic activity and population from places far from the freeway to locations close to it, there is no evidence that it had any long-run effect on economic growth of the Southern region as a whole.

Ejaz Ghani, Arti Grover Goswami, William Kerr, 05 February 2013

Investment in transport plays an important role in a country’s economic development. This column assesses Indian industries that are moving out of the congested big cities in search of cheaper land and buildings, facilitated by major highways. The Golden Quadrilateral highway project -- a huge, country-wide highway building project connecting four major Indian cities -- significantly influences the success of industries’ exodus from the big cities. It is clear that although highway investments are expensive, the costs of not investing may be too high.

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