The availability of a good transportation system is essential toa growing, healthy economy. For this reason, in developing economies transportation improvements are usually among the first projects undertaken to start the path toward economic development and prosperity. Transportation facilities connect markets and facilitate production and trade. Although the relationship between transportation facilities and the well-being of the economy of a country is intuitivelyobvious, little research has been undertaken to measure this relationship quantitatively. An attempt was made to demonstrate that variations in the existing stock of public highways have, to a large extent, explained variations in the productivity of labor and capital inthe private sector of the economy. For this purpose, two econometric regression models were constructed to separately measure the association between the stock of highways and the productivities of (a) private-sector capital and (b) combined labor and capital. The regression models not only support the contention that the highway stock has contributed to improved private-sector productivity, but also that it has had a proportionately greater effect than that of the non-highway infrastructure. A third regression model in which the infrastructure was further disaggregated also supports the same conclusions. This paper appears in transportation research record no. 1274, Transportation and economic development 1990: proceedings of a conference, williamsburg, virginia, november 5-8, 1989.
Abstract