The Effect of Road Investment on Economic Development: A Case Study of the Oregon Counties

• Main Author: Al-Alwan, Ameer Mohammed
• Format: Others
• Published: PDXScholar 1991
• Subjects: Roads > Economic aspects > Oregon > Case studies
• Online Access: https://pdxscholar.library.pdx.edu/open_access_etds/1288; https://pdxscholar.library.pdx.edu/cgi/viewcontent.cgi?article=2287&context=open_access_etds

Despite its significance and frequent mentioning in the literature, the relationship between road investment and economic development has never been clearly understood. A significant number of scholars in this field have always emphasized the need for further research to examine this complex and dynamic relationship. Historically, investment in transportation networks has played a great role in the development of cities, regions, and nations. This positive view is attributed to the indispensable role that water transportation, and then rail transport, played in the early development of Europe and the United States. In recent years, many scholars, as well as policy makers, have disputed that investment in transportation, and in particular roads, in the regions of a highly developed country like the United States will have a great impact on economic development. This disagreement and speculation about the role of transportation investment, especially roads which constitute a large portion of the transportation network, on economic development has made justification for roads funding difficult. This is coupled with the recent decline in federal funding for many civilian programs, and in particular, regional economic development program, that include investment in road systems. Furthermore, rising construction and maintenance costs for major highway systems have substantially out-paced the current funding levels. As a result of the shortage of roads funding and the lack of federal support, individual states have started to take on more responsibility for keeping their road network intact. In almost all the states in the nation, and Oregon is no exception, the state Departments of Transportation have started to use economic development as a criterion for roads funding. Therefore, it is the objective of this dissertation to examine the longitudinal impact of the various types of roads investments on economic development in Oregon in order to better understand this dynamic relationship. Total road expenditures, capital expenditures in the three types of roads (primary, secondary, and local), total maintenance expenditures, and maintenance expenditures in the three types of roads are used as a measure of road investments. Total employment to growth and employment to growth in manufacturing and service sectors are used as a measure of economic development. In order to achieve the above objective, the Granger Causality test at different level of aggregation is used to examine this relationship. First, the state as a single aggregate unit is used to examine the effect of the various road investments on the three employment to growth sectors. Second, different spatial groupings, such as Portland Metropolitan Counties vs. the rest of the state Counties, Urban Counties, vs. Rural Counties, Interstate Counties vs. Non-Interstate Counties, Coastal Counties vs. Non-Coastal Counties, and the Department of Transportation's five designated regions are used to examine this relationship. Finally, the county level as a single disaggregate unit is also used. The results highlighted the complexity of the relationship between road investments and economic development. The nature of this relationship varies from one region to another, and mainly depends on the level of aggregation in determining the direction of this relationship. At the aggregate level, the state as one geographic unit, the various road investments have a positive impact on the employment to growth in this region. In particular, total road expenditure and capital expenditure on primary and secondary roads have a one-way directional relationship runs from the various road expenditures to employment to growth, and the effect of this investment is long-term. This analysis also indicates that the different spatial groupings have demonstrated different relationships. Nevertheless, the general pattern for most spatial groupings tends to suggest either a one-way directional relationship runs from the various road expenditures to employment to growth or a bi-directional relationship. No findings support the hypothesis that employment to growth in the three economic sectors causes road expenditures, with the exception of very few cases, especially at the lower end of the analysis at the county level, where the results are highly discrepant and mixed. In addition, this research indicates that the time-lag effect measured by lag-length and accumulative lag effect changes as the level of aggregation changes. However, the general pattern seems to indicate that total road expenditures and capital expenditures for the three types of roads, particularly primary and secondary roads, have a long-term effect on employment to growth. Also, the relative magnitude effect of total road expenditures and capital expenditures on primary and secondary roads is greater on the employment to growth than is the comparable effect of maintenance expenditures in most spatial groupings. Furthermore, the effect of the various road expenditures on the type of employment (manufacturing and service) depends greatly on the level of aggregation and the type of road Investment Finally, this study provides public policy makers, transportation planners, and regional economic developers a better understanding of the complex relationship between road investment and economic development. A better understanding of this highly complex and dynamic relationship can guide decision makers to best utilize their limited resources. In addition, this research offers insight into the theories and works in the field of transportation and economic development.