Mutual causality in road network growth and economic development


Recently published (free download until January 29, 2016):


• There remains positive feedbacks between roads and population.
• There is little evidence of positive feedbacks between roads and employment.
• This is due to maturation of the network and diminishing returns to new investments.


This paper investigates the relationship between the growth of roads and economic development. We test for mutual causality between the growth of road networks (which are divided functionally into local roads and highways) and changes in county-level population and employment. We employ a panel data set containing observations of road mileage by type for all Minnesota counties over the period 1988 to 2007 to fit a model describing changes in road networks, population and employment. Results indicate that causality runs in both directions between population and local road networks, while no evidence of causality in either direction is found for networks and local employment. We interpret the findings as evidence of a weakening influence of road networks (and transportation more generally) on location, and suggest methods for refining the empirical approach described herein.


  • Highways;
  • Economic development;
  • Employment;
  • Panel data;
  • Minnesota;
  • Population