This report summarises Federal Highway Administration (FHWA) research on the interrelationships between highway infrastructure investment and economic productivity. It explores (1) the definition of productivity and its importance; (2) the extent of our knowledge concerning the relationships between productivity and public capital and highways; (3) the strengths and weaknesses of current research efforts that have received popular acclaim; and (4) recommendations for future research. The paper also reviews recent efforts to employ national and State macroeconomic data to answer the question, "Do additional expenditures on public capital (or on certain subcategories such as highways) increase productivity?" It concentrates on studies that have attempted to estimate the relative productivity contribution of public and private investment, or to examine relative productivity contributions among different categories of public investment. The paper is organised as follows: Section I provides an introduction and defines what productivity is and what may cause a slowdown in productivity. Section II contains a brief review of the literature and the debate over the relationship between public capital and productivity. It is divided into five subsections: aggregate production function studies, regional- or state-level production function analysis, cost and profit functions, cost-benefit analysis, and other alternative approaches. Section III presents conclusions and recommendations concerning this issue.
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