Fall of the Dutch

[Pantalaimon]

For example, if you have a vital roadway that is typically congested for hours every day, spending the money to create more lanes or fix broken pavement will improve the traffic flow increasing the productivity of that urban area.

But will it? I realize this is a throw-away anecdote and a complete derailment of this thread. But what the heck, we're on the LL.

Leaving aside the question of whether it improves the traffic flow (and I've personally worked on many road widening projects which were unequivocally shown at the planning stage to produce neutral or negative long term benefits for the network, but proceed as fast-tracked political wins), I ask you to seriously question the assertion that transportation is linked to productivity. Commuters spend the same number of hours at the office regardless of their length of commute, so their personal contribution to their employer is the same regardless of the traffic jam. Impeded freight movement? Perhaps, although industry often has more flexibility than commuters to reroute spacially or temporally. Additionally, increased shipping costs hurt the manufacturer, but employs an entire industry. Would the economy be better off, as a whole, if we could teleport goods directly from factory to docks?

So what drives the net loss in productivity? "Congestion = bad for GDP" is an assertion that I encounter every day in my working life, and it's quite dear to my heart. The media loves those annual reports about how congestion is "wasting $3 trillion every year". In the political and layperson arena, it goes largely uncontested. But in my view, for many jurisdictions transportation expansion (note: not just roads - rail, transit, bicycle, air) in the name of GDP is their #1 waste of public funds. And it's orders of magnitude larger than fraud, corruption, tax evasion or even the war on drugs.

Take, for example, this study: http://www.strc.ch/conferences/2008/2008...ty_GDP.pdf

The researchers found that transport intensity had no relationship to GDP; rather it was only linked to the mean distance from that jurisdiction to all other jurisdictions.

...the analysis provided no evidence of a correlation between road freight transport indicators expressed in number of trips or km driven and GDP, or with the structure of the economy, that can sustain itself when the variable peripherality is partialled out. In fact, the level of peripherality seems to be the only variable accounting for variations in the transport indicators.

Another study (http://econpapers.repec.org/article/eeet...37-151.htm ) found that GDP growth can be linked to growth in transportation, but it can also be independent or even inversely linked. I would hypothesize that it depends on the major focus of your economy - is it manufacturing, intellectual services or resource based?

... distinguishes between three general types of relations: the GDP growth and the growth of transport can be coupled, decoupled or negatively decoupled. In the 1990’s there were differences between countries within the EU in the degree of decoupling. While in the UK, Germany, Luxembourg, Austria, Finland, the Netherlands and Sweden a weak decoupling could be observed, countries like Ireland, Denmark, France and Belgium showed expansive coupling (Tapio 2005).

Do investments in transportation infrastructure impact quality of life? Probably - although the quality of life in LA or Houston is not significantly higher than anywhere else. Do they impact GDP? In some cases, but not everywhere.