PREDICTING THE IMPACTS OF ROAD INVESTMENT ON GROSS STATE PRODUCT AND EMPLOYMENT

There is a vast literature concerning the effects of public investment on productivity and growth of transport infrastructure. A review of the literature highlights considerable controversy regarding the usefulness of particular modelling approaches and the validity of conclusions attributed to various econometric and general equilibrium methodologies. While social benefit-cost analysis provides information concerning the welfare effects of alternative road proposals, governments and road planners are often interested in the impacts of infrastructure investment in terms of other outcomes. A methodology is proposed which can predict within reasonable limits the impacts of road projects on Gross State Product and employment, and as a by-product, regional output and employment. The information provided by the model complements that provided by social benefit-cost analysis. The proposed methodology is an integrated input-output/ econometric model. (a) For the covering entry of this conference, please see ITRD E200461.