Road Investment to Foster Local Economic Development

Abstract

This study examines the relationship between road investments and local economic development. More specifically, it incorporates the best available theory on this relationship into a workable approach for those faced with making road investment decisions. To provide a sense of the types of projects state-level highway administrators must evaluate and to apply the approach developed, a specific state program is used as a case study. Chapter 1 is an introduction. Chapter 2 presents a discussion of the economic development process. In Chapter 3 highway investment is related to local and regional economic development. Chapter 4 provides a review of previous research on the connection between highway investment and economic growth and development, and reports the results of a survey conducted of all 50 state departments of transportation. Also discussed in Chapter 4 are the features of special economic development highway programs found in 24 states. Their ability to promote efficient investments is examined. Chapter 5 examines Iowa's RISE (Revitalize Iowa's Sound Economy) program. The details of the program are explained and its funding experience to date is summarized. The 18 projects approved more than three years prior to this evaluation are then examined. Performance measures used by the Iowa DOT -- cost per job assisted and capital investment ratio -- are applied to compare projected and reported results. These two performance measures are critiqued as bases for making investment decisions. In the final chapter, Chapter 6, the framework presented in Chapters 2 and 3 are applied to assess the economic development impacts of the 18 case study RISE projects. A series of questions or screens are used in the evaluation of each RISE project. These screens constitute a sequential series of considerations for a state evaluating a proposed road improvement if the objective is local economic development.