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Economic Impact of Transportation Investments

Economic Impact of Transportation Investments. Presentation to the Nebraska Transportation Funding Conference August 26, 2010 Panelist: Eric Thompson, Director Bureau of Business Research College of Business Administration University of Nebraska-Lincoln. Outline.

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Economic Impact of Transportation Investments

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  1. Economic Impact of Transportation Investments Presentation to the Nebraska Transportation Funding Conference August 26, 2010 Panelist: Eric Thompson, Director Bureau of Business Research College of Business Administration University of Nebraska-Lincoln UNL Bureau of Business Research

  2. Outline • Focus on inter-city highways – has investments lead to economic development? • What is the link between highway investment and economic development UNL Bureau of Business Research

  3. Inter-City Highways and Economic Development • Highway investments can improve the efficiency of the economy • Highway investments also may simply reallocate economic activity • So, for many industries economic impact becomes an empirical question • However, for some industries, like manufacturing and tourism, a positive impact is likely UNL Bureau of Business Research

  4. Efficiency - Firms that Compete Nationally for Customers UNL Bureau of Business Research

  5. Efficiency - Firms (such as stores) that compete locally for customers UNL Bureau of Business Research

  6. Interesting Empirical Findings • Fernald (1999), who found that the original Eisenhower highway network (mostly completed by early 1970s) contributed greatly to productivity. • Implication: highway investments can be productive for the economy if there are large benefits relative to costs. UNL Bureau of Business Research

  7. Interesting Empirical Findings • Chandra and Thompson (2000) found that interstates in rural areas: • Grow manufacturing but reduce retail • Increase total employment in counties receiving the interstate, but reduce total employment in adjacent counties. • Implication: Highway investments most likely to benefit manufacturing but overall impact uncertain UNL Bureau of Business Research

  8. It is an empirical question: but which projects are most promising? • Projects with the most road user benefits are the projects most likely to encourage economic development • What type of investments have high benefits? • Investments in congested areas • Investments in areas with significant safety hazards, whether or not in a congested area • Implication: Listen to Civil Engineers! UNL Bureau of Business Research

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