Does transport infrastructure investment pay off? The choice of constructing new transport infrastructure, be it airports or highways, lies in governments’ hands. According to Professor Andrés Rodríguez-Pose from the London School of Economics these decisions can be misguided as far as economic returns are concerned.
At a seminar at the EIB Institute in Luxembourg, Professor Rodríguez-Pose presented the results of a co-authored study demonstrating the link between the quality of regional government and the economic returns of local road infrastructure investments. He argued that poor quality local governments tend to finance economically disproportionate road projects rather than adequate platforms.
The study relies on the analysis of 166 regions in the EU, with a specific focus on motorways and secondary roads. It shows that large-scale road infrastructure projects such as motorways have little impact on regional economic performance. However, investments in secondary roads, especially if they enhance intra-regional connectivity, are paying off – but only in areas with effective and accountable governments.
“Good institutional conditions appear to be a pre-condition for well-targeted and economically profitable investments in infrastructure”, concluded Professor Rodríguez-Pose.
Click here for presentation.