Impact of Investment on Highways and Public Transportation on Productivity Levels

Research Question: What is the impact that investment on highways and public transportation has on productivity levels? What specific areas around the world are affected the most by this question regarding infrastructure?

Annotated Bibliography Rough Draft

Arif, F., & Bayraktar, M. E. (n.d.). Current practices of transportation infrastructure

maintenance investment decision making in the united states. Journal of Transportation Engineering Part A-Systems, 144(6). https://doi-org.nuncio.cofc.edu/10.1061/JTEPBS.0000137

These two authors, Bayraktar and Arif, discuss how the government has not fully recognized investment in infrastructure as a problem and this is why they have done such a poor job of allocating funds from the state budget towards improving highways and public transportation. However, the authors of this article write that there are current actions being taken and worked on in order to improve this issue and help to eliminate the problem of poor transportation infrastructure throughout the United States. The issue of transportation and the current need of mass improvement in this area of infrastructure must continue to be a main focus if the current economic state is to continuously grow. Maximization of the existing effective capacity of the transport systems is essential when it comes to increasing efficiency and more importantly, productivity. This means that attention must be paid to the construction of new roads and a more inventive use of the current transportation system in order to maintain a healthy, growing economy. 

Dumortier, J., Zhang, F., & Marron, J. (2017). State and federal fuel taxes: The road ahead for U.S. infrastructure funding. Transport Policy, 53, 39–49. https://doi-org.nuncio.cofc.edu/10.1016/j.tranpol.2016.08.013

 The authors, Dumortier, Zhang, and Marron, provide a lot of evidence and statistics on the relationship between fuel taxes and the quality of infrastructure. This article states, “Ignoring the current need for a reform of transportation infrastructure funding will only compound the burden for future generations.” (pg. 48) The graphs and figures included in this article are extremely helpful in giving a visual representation to the readers of exactly what the authors are highlighting throughout their article in regards to the relationship between fuel taxes and infrastructure funding within the United States. The authors conclude that the tax system that is currently in place needs to be changed because it is hurting our economy rather than helping it. In figure 3 of this article, it shows the significant amount of revenue (in billions of dollars) that is generated by high and low oil prices. However, although these revenues are significant in amount, they are not being allocated efficiently and distributed back to funding infrastructure in order to help improve our nation’s roads and quality of transportation.

Forkenbrock, D. J., & Foster, N. S. J. (1990). Economic benefits of a corridor highway

investment. Transportation Research Part A: General, 24, 303–312. https://doi.org/10.1016/0191-2607(90)90007-S

These two authors give clear evidence that points directly to low investment in transportation infrastructure having a strong effect on lowering productivity. More specifically, an economy is not able to reach its maximum amount of production in the area when workers are not able to commute to and from work efficiently. The extra time that workers are having to spend in traffic is time that could be spent being productive and adding to the value of a firm. This article written by Foster and Forkenbrock, demonstrates the strong relationship between poor investment in infrastructure and low productivity. These authors also take their article a step further by discussing how current investment in roads and public transportation is having a negative effect on its overall economies level of production, especially when compared to productivity levels within other areas. A main factor as to why some areas productivity levels are not in line with the recent growth of the overall economy is because workers are not able to spend as much time actually working due to a large portion of their time being spent in traffic or having to avoid poor infrastructure on a daily basis.

Rokicki, B., & Stępniak, M. (2018). Major transport infrastructure investment and

regional economic development – An accessibility-based approach. Journal of Transport Geography, 72, 36–49. https://doi.org/10.1016/j.jtrangeo.2018.08.010

The authors, Rokicki and Stępniak, discuss how congested traffic holds up public transportation systems from reaching people at an efficient time, which makes the public transportation system delayed and therefore, less reliable. This causes a problem for businesses and firms within the area whose employees rely mainly on an areas public transportation system in order to get to and from work. Firms will see setbacks and adverse impacts due to loss of productivity and employees from this infrastructure problem. They will also see negative implications regarding their commuters having a stressful and unpredictable drive to work due to all of the congested traffic within the area. There have been several recommendations to mitigate these negative impacts for individuals and firms by allocating more state funding towards better transportation and highway infrastructure. The authors, Rokicki and Stępniak, would argue that government needs to be putting more funding into better public transportation infrastructure. This action will help mitigate problems for workers who spend the majority of their time sitting in traffic, while providing alternative forms of transportation for those who are unable to walk or ride their bike to work.

Sherraden, S. (2009). Public Investment Will Improve America’s Infrastructure. Greenhaven Press. Retrieved from http://link.galegroup.com.nuncio.cofc.edu/apps/doc/EJ3010554211/OVIC?u=cofc_main&sid=OVIC&xid=6618bf27

The author, Sherraden, discusses how a decline in productivity can be directly correlated with poor investment on highways and public transportation systems. Workers find themselves spending more time in traffic and therefore, are unable to spend that time being productive. However, to the state government, the problem has not clicked to them, and infrastructure spending continues to fail at gaining more funds from the state budget, allowing public transportation and highways to remain as a problem. In turn, what this does is cause a decrease in productivity within specific areas, which is detrimental to the overall state of the economy. The author continues to discuss in further detail the impact that investment on highways and public transportation has on productivity.

United States: Infrastructure investment to boost productivity and growth. (2018, February

22). Mena Report. Retrieved from http://link.galegroup.com.nuncio.cofc.edu/apps/doc/A528546609/AONE?u=cofc_main&sid=AONE&xid=1a2c0b4e

This report discusses how an increase in infrastructure investment will cause GDP to increase because there will be higher amounts of productivity within the United States, which will add to the amount of goods and services that GDP accounts for. Furthermore, investment in infrastructure can lower the cost of transportation, leading to an improvement in business productivity because people will now be able to avoid the high costs of commuting to and from work. Based off of this report, the number of funds invested in the infrastructure is increased, then growth for the United States as a whole would increase as well. This report discusses infrastructure investment as being the exogenous variable, and all other things affected such as highways and traffic congestion as being the endogenous variable. If investment in infrastructure was to improve, traffic flow should decrease thus minimizing the time it takes to get to work. Once this travel time is minimized then businesses would have an increase in productivity as it affects the time that it takes for employees to get to work and also the time it takes for goods and services to be transported.

Wan, G., & Zhang, Y. (2018). The direct and indirect effects of infrastructure on firm productivity: Evidence from Chinese manufacturing. China Economic Review, 49, 143–153. https://doi.org/10.1016/j.chieco.2017.04.010

 This article gives specific data by including several tables that show the results for varying factors amount different firms. These factors are on the amount of TFP (capital), productivity, and infrastructure. The authors, Wan and Zhang, also looked at other varying factors that could potentially impact productivity levels as well, rather than just infrastructure. This includes taking in to consideration how long the firm has been around, and where the firm is located. With regards to highways, the result is a net economic benefit for drivers as their time could now be used for something productive. Therefore, if our thesis is proven to be correct then the residents of the Charleston area could arrive at work on time. The business that are in the logistics and transportation industry could also see benefits as their drivers will save more time on the road and getting the shipment to its destination quicker.

Vladimir Kühl Teles, & Caio Cesar Mussolini. (2012). Infrastructure and productivity in Latin America: is there a relationship in the long run? Journal of Economic Studies, (1), 44. https://doi-org.nuncio.cofc.edu/10.1108/01443581211192107

This article focuses exactly on how much of an influence infrastructure can have on productivity within a specific area since productivity is extremely necessary for economic success; productivity creates jobs, products, and determines living standards.  The authors of this article discuss how infrastructure can either positively or negatively affect worker productivity, therefore it is important that the proper investment strategies are made so that way Latin American countries will not suffer in the long run. Improving highway infrastructure and public transportation allows for these Latin American countries to have increased levels of worker productivity, which essentially leads to higher economic performance and growth in the long run. The proper steps are not being taken to eliminate this issue; and the major roadways and transportation systems in Latin America that the author’s mention have become neglected.