Highways and Economic Productivity: Interpreting Recent Evidence

Abstract

This article reviews the recent literature on public infrastructure and economic productivity, with special attention to the particular case of highway infrastructure. Recent evidence suggests that, at the margin, highway infrastructure contributes little to state or national productivity. This is consistent with studies that show relatively small land-use impactsfrom modem highways. Yet the idea that highways enhance economic health is common in the policy and planning communities. Two explanations can help reconcile this divergence between academic research and popular perception. First, some of the economic development observed near highways might not actually be caused by the highway. Second, some of the economic development near highways might be a shift of economic activity awayfrom other areas. Either explanation implies the need for reforms in highway project analysis and funding. This article suggests appropriate policy reforms and directions for future research.