The Global Economic Crisis, Investment in Transport Infrastructure, and Economic Development

Abstract

This paper describes how the relationship between transportation and economic growth has a long history. However, the exact nature of this relationship is not altogether clear. Theoretically, transport infrastructure is expected to have both direct and indirect impacts on economic activity. Direct impacts come in the form of increased employment in transportation construction activity, travel time and cost savings that accrue to businesses and travelers, and the reduction in the number of accidents from improvements in transportation infrastructure. Indirect impacts are the secondary effects that result from improved transportation infrastructure, including: increased trade activity; new businesses, residences, and other development activity; and multiplier effects from expanded economic activity. The connection between transportation and economic growth also has intermediate linkages in the form of accessibility and cohesion. Improvements in transport infrastructure should increase the levels of accessibility between places, thereby facilitating an increase in spatial interaction and economic activity. As cities, regions, and states are brought closer together as a result of improved transport, these places should also become more cohesive across political, social, and cultural dimensions. The paper shows how the increased cohesiveness may also lead to a greater economic impact.