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295 Pages·1996·27.807 MB·English
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Advances in Spatial Science Editorial Board David F. Batten Manfred M. Fischer GeoffreyJ.D. Hewings Peter Nijkarnp Folke Snickars (Coordinating Editor) Springer Berlin Heidelberg New York Barcelona Budapest Hong Kong London Milan Paris Santa Clara Singapore Tokyo Titles in the Series Cristofaro S. Bertuglia, Manfred M. Fischer and Giorgio Preto (Eds.) Technological Change, Economic Development and Space XVI, 354 pages. 1995. ISBN 3-540-59288-1 Harry Coccossis and Peter Nijkamp (Eds.) Overcoming Isolation Information and Transportation Networks in Development Strategies for Peripheral Areas VIII, 272 pages. 1995 ISBN 3-540-59423-X Luc Anselin and Raymond J.G.M. Florax (Eds.) New Directions in Spatial Econometrics XIX, 420 pages. 1995 ISBN 3-540-60020-5 Heikki Eskelinen and Falke Snickars (Eds.) Competitive European Peripheries VIII, 271 pages. 1995 ISBN 3-540-60211-9 Jeroen C.J.M. van den Bergh, Peter Nijkamp and Piet Rietveld(Eds.) Recent Advances in Spatial Equilibrium Modelling VIII, 392 pages. 1996 ISBN 3-540-60708-0 Peter Nijkamp, Gerard Pepping and David Banister Telematics and Transport Behaviour XII, 227 pages. 1996 ISBN 3-540-60919-9 David F. Batten . Charlie Karlsson (Eds.) Infrastructure and the Complexity of Economic Development With 40 Figures and 63 Tables Professor Dr. David F. Batten The Temaplan Group Applied Systems Analysis for Industryand Government P.O. Box3026 Dendy BrightonVIC. 3186 Australia Professor Dr. Charlie Karlsson Jonkoping University Jonkoping International Business School P.O. Box1026 S-5511l Jonkoping Sweden Die Deutsche Bibliothek- CIP-Einheitsaufnahme Infrastructureand the complexilyofeconomic denlopment : with 63 tables/ David F. Ballcn ;Charlie Karlsson (cd.). Berlin; Heidelberg; NewYork; Barcelona; Budapest; Hong Kong; London; Milan; Paris; SantaClara; Singapore; Tokyo: Springer. 1996 (Advon= inspotial science) ISBN3-540-61333-1 NE: Ballen. DavidF. [H...g.J ISBN-13: 978-3-642-80268-3 e-ISBN-13: 978-3-642-80266-9 DOl: 10.1007/978-3-642-80266-9 Thisworkissubjectto copyright. All rights arereserved.whetherthewhole orpart ofthematerialisconcerned,specificallytherightsoftranslation.reprinting,reuseof illustrations, recitation, broadcasting. reproduction on microfilm or in any other way. and storage in data banks. Duplication ofthis publication or parts thereofis permitted only under the provisions ofthe German Copyright LawofSeptember9. 1965. in its current version, and permission for use must always be obtained from Springer-Verlag. Violations are liable for prosecution under the German Copyright Law. CSpringer-VerlagBerlin.Heidelberg1996 SoftcoverreprintofthehardcoverIstedition1996 Theuseofgeneraldescriptivenames, registered names,trademarks,etc.inthispub licationdoesnotimply,evenintheabsenceofaspecificstatement.thatsuch names are exempt from the relevant protective laws and regulations and therefore free for generaluse. SPIN10516914 42/2202-5 4 3 2 1 0- Printedonacid-freepaper PREFACE Fewotherfacetsofsocialandeconomiclifearesopoorlyunderstoodandyetsoindisput ablyvitalforprosperousdevelopmentasirifrastructure.Sincetheearly 1980sresearchers andpolicymakersinvariousOECD nations havestartedtoreaddress theissueofinfra structureinvestments.Thisrenewedinteresthasbeenpromptedbyavarietyofconcerns. Oneobservationwasthatsuchinvestmentsweredecliningfromlevelswhichmighthave been inadequate in the first place. A second observation was that the timing ofthese cutbacks in infrastructure spending seemed to roughly coincide with lower rates of growthinoutputorproductivity. Thisraisedtheintriguingquestionofwhetherthelatter mightbeattributabletotheformer. Coulditbethatinfrastructureinvestmentscontrolan economy's rate of productivity growth? The response in many countries has been to initiatetheirownresearchinanattempttoverifyorrejectthishypothesis. Butthemorewelearnabouttheroleofinfrastructureanditsrelationshipswiththerest ofthe economy, the more complicated it seems to be. Time itselfis quite difficult to accommodategiven thewidevarietyofspeedsatwhichdifferentpartsofaneconomycan adjust. Because ofthis inherent complexity, we tend to break the problem down into "bite-sizedchunks", therebyenablingus toisolatethepartsofinteresttous- suchasthe impact ofinfrastructure on productivity. In this way wecan ignore the complex inter actionsbetweenourareaofinterestandtherestofourworld. By sayingceterisparibus, weoverlookmanyotherkeyinfrastructuralimpactslikethoseontheenvironmentandon ouroverallqualityoflife.Thisdistortsthetruepicture. The selection ofpapers containedin this volume were presented atan international workshop on "Infrastructure, Economic Growth and Regional Development" held in Jonkoping, Sweden during June 1993. All ofthe authors are leading specialists in the infrastructurefield, whosepapersrepresentcutting-edgeattemptstograpplewithsomeof theinfrastructureissuesmentionedabove. Therewasaspecialreasonforholdingsucha workshop in Jonkoping. During the summer of 1990, the Jonkoping International Business School (JIBS) Foundation was created with the support of the private and public sectors. Four years later, the Jonkoping International Business School was establishedby an actofSwedishParliament. In theinterveningyears, theJIBS Founda tion sponsored and organized a series of workshops featuring prominent international scientists in a variety offields. Their purpose was to stress the intention that the new business school should have a strong research profile - which had been one of the recommendationsmadeby theoriginalproponentsoftheschool(AleeE. Anderssonand CharlieKarlsson). Thisexpansionofhighereducationandresearchactivitiesviathenew businessschool was,initself,amajorinfrastructureinvestmentin theJonkopingRegion. Thusoneofthe workshop's aims was intertwined with those of the school. A secondary aim was to assessthecompetitiveimportanceofinvestmentsinknowledge-enhancinginfrastructure vis-a-vis mobility-enhancinginfrastructure. Financial supportwasprovidedbytheJIBS foundation andtheSwedishTransportandCommunicationsResearchBoard.Heldunder the auspices of CIB Working Commission W95 (Infrastructure), the workshop was organizedbyaninternationalcommitteewhichincludedAkeE. Andersson,BotjeJohans son,T.R.LakshmananandFolkeSnickars.JenniferWundersitzcoordinatedtheeditorial workandIngridLindqvistkeyboardedthemanuscript.Toeachoftheabove, theEditors wouldliketoexpresstheirsincerethanks. DavidF. Batten CharlieKarlsson Melbourne,Australia Jonkoping, Sweden CONTENTS Preface v 1. InfrastructureandtheComplexityofEconomicDevelopment: AnExploratoryIntroduction I DavidF. Batten PARTA: INFRASTRUCTUREANDPRODUCTIVITY 2. InfrastructureandManufacturingProductivity:RegionalAccessibility andDevelopmentLevelEffects 17 EdwardM.Bergman&:DaoshanSun 3. Assessing theRoleofInfrastructureinFrancebyMeansofRegionally EstimatedProductionFunctions 37 RemyPrud'homme 4. TheLinkageBetweenTransportationInfrastructureInvestmentand Productivity: AU.S. FederalResearchPerspective .49 SusanJ.Binder&TheresaM. Smith 5. PublicCapital,PrivateSectorProductivityandEconomicGrowth: AMacroeconomicPerspective 61 JaccoHakfoort PARTB: INFRASTRUCTUREPOLICY: PRICINGANDOWNERSHIP ISSUES 6. Infrastructure,WagesandLandPrices 75 AndrewF. Haughwout 7. IntergovernmentalFiscalRelationsinCalifornia: ACritical Evaluation 97, JulietA.Musso &John M. Quigley 8. DoesMultiplicityMattermorethan OwnershipintheEfficiency ofInfrastructureServices? 125 FrannieHumplick 9. Ownership,InvestmentandPricingofTransportandCommunications Infrastructure 147 KennethButton PARTC:THECOMPLEXITYOFECONOMICDEVELOPMENT 10. Complexity,AdaptabilityandFlexibilityinInfrastructureand Regional Development: InsightsandImplicationsforPolicy AnalysisandPlanning : 169 JonathanL. Gifford viii 11. ProductionMilieu andCompetitiveAdvantages 187 BorjeJohansson & RuneWigren . 12. AReviewofInfrastructure'sImpactonEconomicDevelopment.. 213 ChristineKessides 13. InfrastructureandUrbanDevelopment: TheCaseoftheAmsterdam OrbitalMotorway 231 FrankBruinsma, GerardPepping & PietRietveld 14. InnovativeCapacity,Infrastructureand RegionalPolicy 251 LuisSuarez-Villa 15. ValuationsofEnvironmentalExternalities: SomeRecentResults 271 EmileQuinet AuthorIndex 293 ListofContributors 297 CHAPTER 1 Infrastructure and the Complexity of Economic Develop ment: An Exploratory Introduction David F. Batten TheTemaplanGroup,Melbourne 1.1 THE PROBLEM 1.1.1 Complexity in Economics In the Preface to his recent book on economic sense and nonsense in this "Age of DiminishedExpectations",theMITeconomistPaulKrugmanwrote: "Whyiseconomicssuchahardsubject? Panoftheanswerhastodowithcomplexity". The more we learn about theeconomy, the morecomplicateditseems to be. Although economics can truthfully claim that it attempts to study human beings engaged in a relatively simpleactivity (theexchangeofgoodsandservices),complicationsstillarise because those same human beings are often assumed to exhibit identical behavioural traits.Thekindofrationalitynormallyassumedineconomics- perfect,logical,deductive rationality- simply breaks down in many common decision situations. Human agents cannotrely upon otheragents to behaveinaperfectlyrational manner. The truthofthe matter is that each economic agent must resort to educated guesswork in a world of subjective beliefs, where there is little room for well-defined premises and perfectly logicalchoices. Inthissubjectiveworld,veryfewproblemsaresimplebecausemanyare ill-defined. Krugman is notalonein his beliefthatthevariousoversimplifiedportraitsofhuman behaviourhaveretardedprogressineconomics. BrianArthur, for example, has argued thatineconomicdecisioncontextsthatarecomplicatedorill-defined,humanbeingsrely oninductiveratherthandeductivereasonIng. BuildingontheworkofJohnHollandand other colleagues, Arthur claims that in such situations we induce a variety ofmental modelsorhypothesesavailableto usatthetime,actuponthemostcredibleofthese,and laterreplace thesemodels with neweronesiftheoriginalonesceaseto work. This kind ofreasoning generates an extremely rich psychological world in which each agent's mental models or hypotheses compete for survival against those of others, in an environmentformed byotheragents' mentalmodelsorhypotheses. Suchaworldis both evolutionaryandcomplex. 2 InfrastructureandtheComplexityofEconomicDevelopment The persistentreadercanfind ample supportfor the view thatthe economy is much morecomplex thancustomarilyportrayed, partly because human beingsdo not behave rationallyandidentically. A smallbutgrowingbandofeconomistsare comingtoterms with someofthedifficulties, whichareevenreferred to in the worksofafew classical economists: "Theprocessofsociallifeisafunctionofsomanyvariab les many of which are not amenable to anything like measurementthatevenmerediagnosis ofa given stateof things becomes a doubtful matter quite apart from the formidable sources oferror that open up as soon as we attemptprognosis."(Schumpeter, 1942) "We have suggested that there is no agreement on how economicdevelopmentproceedsandhaveimpliedthatthis is because the process is not simple. There are many variablesinvolved, and there isawiderangeofsubstitut abilityamongingredients- land,capitalandthequalityand quantity oflabour, and technology can substitute for one another, above certain minima, although there are at the same time certain complementary relationships among them. Thewilltoeconomiseandorganisationareprobably the only indispensable ingredients. For the rest, none are necessaryandnonesufficient."(Kindleberger, 1958) Inthisintroductorychapter, Ishallargue (likeArthur) thatineconomicsweneedtopay moreattention toinductivereasoning, topath-dependentdynamics, andtotheemergent behaviourofcomplex self-organizing systems (see, e.g. Nicolis and Prigogine, 1977; Raken, 1978; Batten, 1982). More specifically, I shall dwell on a few examples pertainingtotransportationinfrastructure. Someinstancesoflock-inandpath-dependence associated with certain modes of transportation will be examined and their dynamic learning character revealed. Connections with evolution and complexity will be considered, asaforerunnertoadiscussionofthearticles whichfollow in theremainder ofthis book. 1.1.2 The Path-Dependent Character of Infrastructure Systems The complexity of infrastructure systems arises partly from the interface between a relatively staticarena(orbackcloth) whichsupports andconstrainsarelativelydynamic trafficofactivities (seeJohnson, 1995).Theemergentbehaviourofthe systemdepends onthedetaileddesign ofthearenaand the collectivebehaviourofthe traffic using it. In the caseoftransportation, thearenahasanetwork structureandsoitsperformancealso dependsontheconnectivityofthenetworkaswellasitscapacity. Atransportationnetworkforms anarenaon whichmanydifferentdecisionsareacted out. Although some seemroutine(suchastheroutechosenbydifferentdrivers toreach theirworkplace),eachoneisbasedonincompleteinformationaboutthechoicesofother drivers and the state ofthe system as a whole. Because ofthe uncertain behaviour of differentdrivers, we know now thataunique trafficequilibriumis less likely than was firstbelievedbyclassical transport analysts. Differencesin thedurabilityofcapital, the speed ofinformation diffusion, and adaptability to changes in the environmentjointly determine the time it may take for different transportation systems to reach a new equilibriumorremainoutofequilibrium. In thefaceofmultiplecandidates,thequestion ofhowaparticularequilibriummayormay notbeselectedisofparticularimportance. DavidF.Batten 3 Acompletearenaofinfrastructurechangesmuchmoreslowlythandothepatternsof traffic utilizing it. In order to grapple with the multiple equilibria problem, various processes of change need to be distinguished according to their adjustment speed. Dependingon thelengthofthetimeperiodchosen, someprocessesmay beregarded as invariantwhereasothersmayreachtheirequilibriumratherquickly. Theslavingprinciple impliesanorderingofprocessesinaccordancewiththeiradjustmenttimeonascalefrom slowtofast (seeHaken, 1978).ThefollowingFigureillustrateshowthisprinciplemight help ustodistinguish betweenslowandfast adjustmentprocessesinthecontextoftrade andtransportationanalysis. SPEEDOF ADJUSTMENT VerySlow (Decades) Slow (5-10years) Moderate (1-2years) Fast (Weeklyor evendaily) Figure 1.1 Nestingofslowandfastadjustmentprocessespertainingtotradeand transportation In theface ofsuch differences, it may berelativelyeasy for a transportation system to "lock-in"to aparticularoutcomeorequilibriumwhich possessesaperceivedeconomic advantage at the time (see Arthur, 1994b). Examples of technological lock-in are numerous.Twopopularonescited byArthurandPaulDavidarethestandardkeyboard layout (QWERTY) and home tape cassette system (VHS). Neither the QWERTY nor VHS systems are the most efficient solutions technologically, but they established themselveswellinadvanceofbettercompetitors. Theirdominanceresultedmoreorless by accident rather than from any demonstrated superiority in the marketplace. Once adopted, they became well and truly "locked in" as standards because of positive feedbackslikeuserfamiliarityandthetremendouscostinvolvedtopermitchangeovertoa superioralternativeatalaterdate. Whenitcomestotransportationandindustriallocation,lock-incanoccurassequential decisionscarveout an advantage which society finds itimpossible to escapefrom ata later date (when the advantages of alternative systems become more'apparent). Furthennore, the beneficiaries are notalwayseasyto predict. Take thecaseoftheErie

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