A Review of the Firm-Level Role of Transport Infrastructure with Implications for Transport Project Evaluation

Abstract

The measurement of the economic impacts of transportation investment is a critical input into the policy process. While most research has focused on aggregate effects, this article critically reviews evidence and arguments surrounding the role of transport infrastructure at the firm level. In addition to how transport investment affects firms’ transport decision directly, there are a number of mechanisms whereby transport investment can affect the location and spatial organization of firms. Such mechanisms can lead to increases of output and productivity and create firm-level benefits beyond the direct transport user benefits considered in traditional project evaluation. Transport project evaluation and transport policy more in general require an understanding of these micro-level transmission mechanisms to correctly guide investment decisions regarding the location and type of future transport projects.