Economic Development

Three Levels of Analysis

There are three general levels of looking at highway related economic development. One is at the national level e.g., how much do our nation's highways help the national economy. Two offices in FHWA are sometimes involved at this level. Their general websites are: www.fhwa.dot.gov/policy/otps/highways.htm and www.fhwa.dot.gov/policyinformation/index.cfm.

Another is at the regional level (e.g., what kind of transportation investments should a region make to optimize its economic growth). A good example of this is the Latin America Trade and Transportation Study. The reports, which were generated by this study were incorporated into products such as the State long range plan and the State Transportation Improvement Program in the 13 southeast States (and the Commonwealth of Puerto Rico) that were part of the study. An earlier example of economic development at the regional level was what became known as the Delta Report. A short version of this was published in the 1996 winter issue of Public Roads (also available are the full report of the 1996 Delta report which focused on transportation and the 2000 Delta report which was on comprehensive planning aspects of the Delta). As noted in the public briefing for the Economic Development Highways Initiative, the 1996 report influenced Congress's interest in this general subject. The 2000 report was approximately contemporaneous with the creation of the Delta Region Authority. An example of a regional economic development organization that has done some work on transportation is http://www.ngplains.org/. For many years, federal highway funds have participated in projects under the administration of the Appalachian Regional Commission (ARC). The mission of the ARC is to create opportunities for self-sustaining economic development and improved quality of life within the Applalachian region which is comprised of portions of 13 States. The ARC transportation program is one of the tools the commission has to achieve this mission. Some individual projects are sufficiently large in scale to have regional impacts. A Guide for Quantifying Economic Impacts of such projects was published by the U.S. Office of the Secretary of Transportation.

The FHWA is aware that many States have economic development highway programs. Some of these concentrate on improving or constructing short sections of highway that connect employers to regional highways. Some concentrate on connecting urban areas with 4-lane highways. Some are essentially State contributions to projects that come from local economic development programs. The FHWA funded research that developed a catalogue of these programs as they existed in late 2002 and early 2003, and a more detailed look at four specific such programs. This research was conducted by the Economic Development Research Group. The FHWA considers the statements made in the report to accurately report the facts and opinions at the time of the report. However, the FHWA does not necessarily agree with such opinions and recognizes that State program change their nature over time.

Finally, there is the local level, where FHWA seeks to have better understanding of the causes and/or mechanisms that make improvements in highways help local economies. Two reports were developed by the Economic Development Research Group Inc. and Cambridge Systematics, Inc. under contract with FHWA. They offer a summary of literature, data sources and agency needs, as well as, guidance for using empirical information to measure the economic impact of highway investments. FHWA encourages those doing before-after (a.k.a. ex-post) studies to examine them at www.edrgroup.com/hwy-impact.html. An example of a study of the effect of the World Trade Bridge in Laredo, Texas, using employment statistics collected by the Federal government (and showing substantial job growth after the bridge was built) would be an example of this kind of study.

Assistance to State & Local Officials

To assist State and local officials in using the guidance, FHWA has sponsored research that serves as a template of sorts. These studies were on the I-86 corridor in NY and the SR 29 corridor in Wisconsin. The study reports were reviewed by FHWA and by state and local officials. FHWA considers the information in the reports to be basically accurate and to accurately report the opinion of people whose opinions are reported. However, FHWA does not necessarily share these opinions nor are the reports a specification, standard or policy. The I-86 corridor was designated a future Interstate in the TEA-21 of 1998. The SR-29 corridor was improved from a 2-lane highway to a divided 4-lane highway over about a decade through the initiative of the State of Wisconsin. As a follow up to the research, FHWA did on site reviews of the State Highway 29 corridor in Wisconsin and the western and central sections of I-86 in New York. As a prelude to a possible research project, FHWA has also done an on site review of the Hoosier Heartland Industrial Corridor in Indiana and Ohio. These reviews are the statement of the FHWA official who made them and are valid as of the date of the report.

To assist State and local officials in developing designated future mostly rural interstate highways, FHWA has completed research on existing mostly rural interstates (in one case a near-Interstate). The core of this research is a series of studies (conducted from 2003 to 2004) that are before/after type studies (the long construction period of interstate highways makes it essentially impossible to do a pure before/after study). As noted in this introduction to the research, the FHWA discourages inappropriate extrapolation from the results of these studies. The studies were:

CA: SR-99 (mostly improved to Interstate Standards)
- CA: SR-99 (2005 update)
GA: I-16
IA: I-29
MD: I-68
- MD: I-68 (2005 update)
PA: I-81
- PA: I-81 (2005 update)
SC: I-26
TX: I-27
VA: I-81 and,
WI: I- 43

FHWA has a summary of this research noting cases where the interstate apparently resulted in success in economic development and cases where it did not. In total, the studies support the proposition that areas with a modestly successful economic development program will have more success with an Interstate highway nearby. However, the studies do not support the proposition that a nearby Interstate automatically means economic development. Similarly, the studies do not support the proposition that a nearby Interstate automatically means sprawl and low-wage jobs. While this research clearly advances understanding of the subject of highway related economic development, it does not, by any means, extinguish the need for further study. The consultant, who conducted the research for the FHWA, has noted reasonably achievable steps for further research in the 9 studies listed above. Also as a prelude to a possible research project FHWA has done a site review of the economic development implications in northeast Tennessee and nearby Virginia resulting from the construction of I-26 south of I-81 and the renumbering of I-181 to I-26 between I-81 and Kingsport. Finally, a narrative historical paper on I-85 provides a multi decade perspective on articles in Business Week and the Wall Street Journal that appeared in the 1990s about employment gains in that corridor.

Technical & Analytical Papers

In FY 2004, FHWA completed an economic development highway initiative based on direction from Congress. A briefing and other information on this initiative is available at Economic Development Highways Initiative - Public Briefing. Studies of corridors in the following States are available: Alabama (US 43, US 80 and Auto manufacturing), California (in Fresno and Imperial County), Louisiana (Lincoln and Morehouse Parish), Montana (US 2), North Carolina (US 64), Pennsylvania (I-99), South Dakota (Pine Ridge Indian Reservation), Texas (US 83), and West Virginia (southwest counties).

A number of papers have been done for TRB related events. For example, a paper entitled, paper on Economic Development was presented at a 1999 TRB event. Papers on Economic Development and Highways History and Economic Development vs. Benefit Cost policy during TEA-21 were presented at a 2002 TRB meeting.

The author's notes in the 2nd 2002 paper refer to the author's notes in the 1st 2002 paper.

In the summer 2002 issue of the magazine Public Roads, there is an article entitled, "Do Better Roads Mean More Jobs?"

"FHWA has drawn on its experience in the economic development highways initiative and various other work to develop a typology of economic development highway projects. This was the subject of a 2003 TRB paper by Martin Weiss of FHWA and Roger Figura of AECOM . The final analytical product derived from the initiative was a 2004 TRB paper (presented for the 9th National Conference on Transportation Planning for Small and Medium-Sized Communities, sponsored by TRB committee, A1D05), by the same two people on lessons learned, which includes a more refined typology including analytic methodologies.

Economic Development

Three Levels of Analysis

Assistance to State & Local Officials

Technical & Analytical Papers

Other links: