THERE'S A NOTICE in Ireland's national newspapers about a stretch of road (parallel to the one at left) about to earn a motorway designation near my home. It will be called the M8 and it will help me reduce the time to travel to the centre of Cork to less than an hour. On some occasions, it will save me two hours of time every week. For my employers, that represents a savings of at least €150 and on some spreadsheets, it means be able to generate more than €7000 of additional revenue annually. That number represents a monetary value of productivity directly related to a stretch of high-speed highway. Americans notched up this kind of productivity in the 60s and 70s as the interstate highway system came together.
Originally, the US aimed to build 42,000 miles of interstate highways in 12 years for $25 billion but the project took longer and cost more. As The Economist reports, "the system had taken 37 years at a cost of $425 billion."
The Economist cites research from Nadiri and Mamuneas on the impact of the US interstate highway system. In all but three of the 35 industries they studied, costs fell sharply--by 24 cents for each $1 ivested in the highways--thanks to easier and cheaper transport. As a result, the authors reckoned, the highway system had a big impact on productivity. In the 1960s, the authors put the contribution on productivity at 25%.
If Ireland enjoys that kind of productivity boost, it could help combat some of the rising costs of doing business in Ireland.
Ishaq Nadiri and Theofanis Mamuneas -- "Highways and the Economy: Macroeconomic Perspectives"
The Economist -- "America's Splurge", 16 Feburary 2008.
