Study examines link between road networks and economic development |CTS Catalyst

From CTS Catalyst: Study examines link between road networks and economic development

Researchers studying the relationship between the growth of road networks and regional development at the county level in Minnesota found a weakening connection between the two.

“The influence of road networks on employment isn’t as large as it used to be,” according to Michael Iacono, a research fellow with the Department of Civil, Environmental, and Geo- Engineering (CEGE). Iacono and David Levinson, the RP Braun/CTS Chair in Transportation, authored a paper with their findings earlier this year titled “Mutual Causation in Highway Construction and Economic Development.” Iacono also shared their findings during a presentation at the CTS annual research conference in May.

The researchers measured regional development by examining changes in data about population and employment. They used 20 years of road data from the Minnesota Department of Transportation (1988–2007) and employment data from Minnesota counties for the same period.

Part of the reason for the lack of connection between roads and development simply may be the maturity of the road network. In other words, existing roads facilitate most economic activity. “We’ve made most of the biggest, most productive investments already,” Iacono explained.

The researchers interpreted the findings as evidence of a weakening influence statewide of road networks (and transportation more generally) on the location of economic development. However, it’s possible that other location factors such as human capital levels, tax rates, and natural amenities have become just as, if not more, important than transportation network considerations.

“One of the implications of the findings,” Iacono said, “is that highway projects ought to be evaluated according to the benefits they provide to users, rather than hoped-for impacts on local employment or land development.”

Iacono added that since, from a statewide perspective, most of the major investments in road networks have been made, further changes to road networks likely won’t lead to significant changes in where people live and work. But he cautioned that these findings are too broad to be applied to specific development projects.

The study did find, however, mutual causality between population changes and the growth of local networks. Specifically, it found that the growth of the highway network tends to follow changes in population, and this result was statistically significant. Population growth also followed highway growth (they were positively correlated), but the result was not statistically significant.

“Recent state highway and multimodal long-range plans align well with the research results, recognizing the importance of preserving existing high-value critical connections in a state of good repair,” says John L. Wilson, economic policy analyst with MnDOT’s Office of Transportation System Management. “Current funding constraints should limit system capacity expansion to cases with evident benefits to the traveling public in the form of travel time savings, reduced operating costs, and improved safety.”

The study stems from a previous research effort for MnDOT.

One thought on “Study examines link between road networks and economic development |CTS Catalyst

  1. Seems like good advice for more than just road networks. Public Transit and freight networks should also limit benefits to those directly related to use of the transportation facility. The theory of Ricardian equivalents should lay the ground work for this. Sorry if the question is being asked to late, but did you find that when road network investments had the biggest economic development benefit is when the project delivered the biggest road user benefits.

    I am very happy to defer to market judgement of investors that pony up money for the transportation project in direct relationship to the percentage of the transportation project they are willing to pony up.


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