With regard to transportation infrastructure investment, the tireless efforts of our administration underscore the widely-held but never adequately resolved notion that transportation investments can and does influence the economic development of any region or nation. Indeed, transportation contributes largely to GDP, it consumes a large amount of goods and services, employs a large number of people, and generates revenue to federal, state and local governments. It has been reported by the USDOT that every $1 billion invested in transportation infrastructure generates more than $2 billion in economic activity and creates up to 42,000 jobs. However, questions remain regarding the strength and nature of this connection. First, it is sought to ascertain that the relationship is not merely one of correlation but one of causation. The economy and transportation have a reciprocal relationship -- increased economic output leads to increased amount of travel, while increased travel leads to higher economic output. But which comes first, the chicken or the egg, and what really, is the best way to model this simultaneous relationship? Secondly, investments must not only benefit high income groups; so, there are also the social justice concerns. It is preferred that transportation investments contribute to reduced income inequality. Third, it is sought to ascertain the effect of regional advancement on the nature of the transportation-economy relationship: the link may be stronger at less developed economies compared to highly developed economies. Thirdly, the strength of the link may be different depending on the investment project size: in general, economic development impacts are considerable when the project is large in magnitude and scope; thus, small projects are deemed unsuitable because the impacts may not be so visible. But how small is too small? These issues are worthy of an interesting discussion.
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Samuel Labi Ph.D., M.ASCE
Associate Professor
Purdue University
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