2003 Problem Statement on Causal Links Between Transportation and Economic Development

Issue Statement by the TRB Committee on Transportation and Economic Development

Problem. Economic development has emerged as a major justification for capital investment in highways, transit, and sometimes also airport and water port facilities. There is a growing body of research on this subject, focused largely on empirical analysis of the correlation between changes in transportation investment and changes in economic development. There has also been some discussion of factors that could help explain those changes and relationships, though it has been largely qualitative. While these bodies of research are interesting, there is concern that they can be misapplied as a justification for any sort of transportation investment. As a result, there is a remaining need for practitioners and researchers to better identify the causal mechanisms that determine when and how transportation investments actually affect economic development.

Need. Much of the limitation of existing knowledge among transportation agencies is while there are many possible factors at play, much of the empirical research on those factors has been done outside of the realm of normal transportation research. There are separate bodies of literature, less commonly used by transportation planners, that can actually shed light on these causal mechanisms and thus help to identify when and how transportation investments are most likely to cause economic development. This set of literature specifically includes (1) business production, inventory and logistics/distribution research, (2) corporate site selection research, (3) labor market research, and (4) urban development research.

To be Studied. It is proposed that study be made covering the lessons learned from business, economic and urban development research that can shed light on the causal and behavioral mechanisms creating economic development impacts from transportation projects. The study will identify key findings from empirical research studies that can help transportation planners to identify the incidence and distribution of business and economic development benefits. It will serve as a resource for states interested in prioritizing and planning projects using the best available information on how different economic development impacts can come from different types of transportation investments in different settings.

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