Economic benefits of a corridor highway investment

With strong emphasis on economic development at the local and state levels in the United States, considerable interest exists in upgrading highways to help make an area more attractive to businesses. This article examines the nature and level of economic benefits that result from highway investments. Previous research on this relationship is examined. Economics principles are applied in positing a conceptual framework with which to assess the benefits of a highway investment. Two basic types of benefits are defined: reductions in transportation costs and increases in economic activity. We argue that road user benefits should form the basis for a decision of whether or not to invest public funds to upgrade a highway. From a national perspective, increases in local economic activity near the route are transfers from other locations and are not actually economic development. The conceptual framework is used to evaluate four alternative routes in a 500 mile corridor connecting two large metropolitan areas in the Midwest region of the U.S.