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Economic Research

Economic effects of transport infrastructure improvements: roads

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  • Release date: 24 May 2006
This research established the impact of recent major road transport infrastructure improvements on economic development in Wales with the aim of informing the appraisal of future projects.

Methodology

Review of existing research and an empirical investigation of the impact of road transport improvements along at least one key corridor.

Economic Research Unit's main conclusions

1. The purpose of the research was to investigate the nature and scale of the economic impact of road infrastructure improvements. This was done through synthesising earlier research results and by making a broad assessment of the economic performance of a number of corridors (mainly but not exclusively in Wales). In particular, comparisons were made between corridors that had experienced extensive improvements with those that had not.

2. The main conclusions include:

  • There can be significant efficiency gains to individual businesses as a result of road improvements leading to easier journeys (though the scale of such savings is typically small compared to total production costs). This is not surprising since such gains are one of the main elements in the economic case for road infrastructure improvements.
  • To a large extent such gains are already counted in the assessment of benefits in scheme appraisal.
  • Whilst there is some evidence of wider economic effects, these primarily take the form of affecting the location of economic activity, rather than the overall level of such activity (although directing activity to a disadvantaged location can of course itself count as a benefit).
  • In most cases, such locational effects take place at the local scale, and there is little or no evidence from the schemes examined of net economic gains at the sub-regional (local authority) level.

3. One of the key implications is that the economic case for individual schemes will depend heavily upon the details of the schemes in question, and in particular on the scale and nature of the improvements to journeys actually delivered. Broad brush claims made about road improvements by both poles in the public debate are often hard to sustain - it is clear that road improvements can bring economic benefits, but also that they are rarely "magic bullets" which will transform economic performance.

4. The research has been subject to independent peer review by a senior academic transport economist at the University of Leeds and by an economist at the Department for Transport. Both confirmed that the general conclusions were well-founded.

5. The conclusions are also consistent with research into the wider economic effects of improving the A40 in West Wales carried out by Berkeley Hanover Consulting for the Transport Directorate. There was close liaison and sharing of data between the consultants engaged in both studies.

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