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Document 1 of 1

Empirical analysis of transportation investment and economic development at

state, county and municipality levels
Author: Joseph BerechmanDilruba OzmenKaan Ozbay
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Abstract: Numerous studies have found positive correlation between transportation
infrastructure investment and economic development. Basically these studies use a conventional
production function model augmented by a public capital input, mainly highways, rail and other
transportation facilities. While the range of the measured economic growth effects varies widely
among studies, the positive elasticity between transportation investment and economic
development is now commonly accepted. Still a major puzzling issue is that the magnitude of the
measured effect seems to decline significantly as the econometric model is further refined, mainly
with regard to space and time lags. That is, the use of national or state data produces elasticity
results, which are much larger than when using county or municipality data. Similarly, when we
introduce into the econometric model a lag between the times when the transportation
investments are made and when the economic benefits transpire, the measured elasticities
decline with the size of the lag. Thus, the main objective of this paper is to investigate these
issues analytically and empirically and provide a plausible explanation. We do so by using
alternative econometric models, applying them to a database, which is composed of longitudinal
state, county and municipality observations from 1990 to 2000. The key result is that
transportation investments produce strong spillover effects relative to space and time. Unless
these factors are properly accounted for many reported empirical results are likely to be overly
biased, with important policy implications. [PUBLICATION ABSTRACT]

Subject: Studies; Economic development; Transportation planning; Investment;

Classification: 1110: Economic conditions & forecasts; 1200: Social policy; 9130:
Experimental/theoretical
Publication title: Transportation
Volume: 33
Issue: 6
Pages: 537-551
Publication year: 2006
Publication date: Nov 2006
Publisher: Springer Science & Business Media
Place of publication: New York
Country of publication: Netherlands
Publication subject: Transportation
ISSN: 00494488
Source type: Scholarly Journals
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Language of publication: English

Document type: Feature
Document feature: Tables Equations Graphs References
DOI: http://dx.doi.org/10.1007/s11116-006-7472-6
ProQuest document ID: 212429432
Document URL: http://search.proquest.com/docview/212429432?accountid=31434
Copyright: Springer Science+Business Media, LLC 2006
Last updated: 2014-08-16
Database: ABI/INFORM Complete,ProQuest Research Library

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