Economic development occurs when the income and product generated within an area increase. Government policies can promote economic development by helping an area increase the returns from using resources there. They do this by providing services that produce benefitsin excess of their costs. Transportation services generate benefitsby serving as an economic tool used in transporting goods and people. The benefits of transportation investments are strictly related to reductions in transportation costs. These investments foster economic development by increasing net local income through cost reductions that exceed the cost of such investments. A series of important issues should be taken into account when examining the extent to which a transportation investment contributes to economic development. The issues include the scale of the impact area to be considered because some activity will move from one location to another, because ofuncertainties in future economic circumstances, and for social objectives. For example, policy trade-offs must be made between maximizing overall economic development within a state and assisting a less-promising but needy area. Six paradigms illustrate the types of trade-offs that decision makers face when using transportation investments to foster local economic development. Finally, a series of decision screens are presented to provide a practical basis for applying the principles discussed. This paper appears in transportation research record no. 1274, Transportation and economic development 1990: proceedings of a conference, williamsburg, virginia, november 5-8, 1989.
Samenvatting