The impact of infrastructural investment on economic development : report on the fourth round table on transport economics held in Paris.

155 Pages·1969·1.706 MB·English

by  OECD

ECONOMIC RESEARCH CENTRE
REPORT ON THE FOURTH ROUND TABLE
ON TRANSPORT ECONOMICS
held in Paris, on the following topic :
the impact of
infrastructural investment
on
economic development
EUROPEAN CONFERENCE OF MINISTERS OF TRANSPORTS
REPORT ON THE FOURTH ROUND TABLE
ON TRANSPORT ECONOMICS
held in Paris, on the following topic:
the impact of
infrastructural investment
on
economic development
CONFERENCE EUROPEEWNE
DES MINISTRES DES TRANSPORTS
33, Rue de Franqueville
75775 PARIS CEDEX 16
Tel. : [phone]
EUROPEAN CONFERENCE OF MINISTERS OF TRANSPORTS
CONTENTS
Page
INTRODUCTION
Remarks on criteria for infrastructural
investment in developed economics
Report by Dr. Gerd ABERLE
The linkage effects of transport
infrastructures
Report by Michel DELAYGUE 19
The effect of infrastructural investment
on economic development in the case of
Belgium
Report by A. DE WAELE 71
Study of the economic impact of a major
motorway investment 85
Annex 97
Report by A.J. HARRISON
Influence of the Belgrade-Bar railway line
construction on the economic development
of Yugoslavia
Report by Dr. Stojan NOVAKOVIC 109
SYNOPSIS OP THE DISCUSSION 129
INTRODUCTION
Since 1968, the E.C.M.T. (1) has organised a series of
Round Tables on Transport Economics to follow up the Symposia
on this subject held at Strasbourg (1964), Munich (1967) and
Rome (1969).
These Symposia covered fairly broad topics and were
attended by a large number of participants. The Round Tables
are the second stage in the scientific programme of the
E.C.M.T. Their aim is to explore in depth within a small
and specialized forum some of the topics discussed from a more
general angle in the course of the Symposia.
Besides putting certain aspects of transport economics
in closer focus, the Round Tables are also intended to bring
out findings which have a bearing on transport policy and
practice.
As the promotion of transport at international level is
the essential task of the E.C.M.T., it is right to try to put
practice on a better theoretical basis and that practitioners
should try to make use of the best theoretical knowledge and
that scientific projects should be shaped with an eye to the
guidance of practitioners.
In 1969* a third stage in the scientific programme was
launched in the form of transport economics seminars, where
senior officials consider the results of the scientific studies
and draw from them such conclusions as they see fit for policy
purposes.
The topic dealt with at the present Round Table has a
special bearing on transport policy because of its complexity
and controversial aspects. It was accordingly judged that
this issue - which is often over-simplified or even distorted -
deserved to be analysed dispassionately and methodically.
(1) The European Conference of Ministers of Transport comprises
the following countries: Austria, Belgium, Denmark, France,
Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands,
Norway, Portugal, Spain, Sweden, Switzerland, Turkey,
the United Kingdom and Yugoslavia.
74494
The original arrangement was that a number of specific
cases should be thoroughly debated and, to this end, that five
specialists should each draft a brief introductory report on
the effects of a well-defined infrastructure which had come
into service since 1950. t
This procedure failed to be fully implemented through
lack of available data. The comparison of concrete case
studies and the drawing of distinctions according to economic
contexts coul'd not, therefore, be fully achieved.
This information gap clearly reveals that one of the most
common topics of present-day regional economics is discussed
without the assumptions being truly tested and without close
scrutiny of undisputable data. It is right to emphasize how
urgent and important it is to undertake methodical surveys in
order to get a clearer view of the various aspects of a problem
which involves the commitment of financial resources on so big
a scale on grounds that are so uncertain.
The present publication comprises the full text of the
basic papers and a summary of the Round Table discussions.
Despite the handicap mentioned above, the participants in the
Round Table did their utmost to discuss the issue objectively
and to bring out conclusions systematically.
English and French copies of this paper are to be widely
circulated to the various bodies and individuals concerned.
The E.C.M.T. will welcome any inquiries and suggestions for
improvements or for giving the report a wider readership.
LIST OF PARTICIPANTS
Monsieur J.P. BAUMGARTNER (Chairman)
Adjoint au Secretaire G6n6ral
des Chemins de Fer F6d6raux Suisses
Hochschulstrasse 6
3000 BERNE
Dr. G. ABERLE (Rapporteur)
Institut fur Verkehrswissenschaft
an der UniversitSt zu Kbln
Universitatsstrasse 22
5 KOLN-LINDENTHAL
Monsieur Michel DELAYGUE (was unable
Diplome' d1Etudes Sup^rieures to attend)
en Sciences Economiques
Faculty de Droit
et des Sciences Economiques
de l'Universite de Lyon
15, Quai Claude Bernard
69 LYON 7°
A.J. HARRISON (Rapporteur)
Economic Adviser-
Ministry of Transport
St. Christopher House
Southwark Street,
LONDON, S.E.I.
Dr. Stojan NOVAKOVIC (Rapporteur)
University de Belgrade
Trg. Marksa i Engelsa broj 8/VI
BEOGRAD
A. de WAELE (Rapporteur)
Consultant C.E.M.T.
Monsieur BONNAFOUS (introduced
Ingefiieur Economiste Mr. Delaygue's
Faculty de Droit report)
et des Sciences Economiques
de l'Universite de Lyon
15, Quai Claude Bernard
69 LYON 7°
Monsieur BOURDREZ
Stichting het Nederlandsch
Economisch Instituut
Pieter de Hoochweg 118
ROTTERDAM 6
Professor Svend GODLUND
University de Goteborg
Bangatan 39
GOTEBORG V (Suede)
- iii -
Monsieur Y. GORON
Soci6t6 d'Etudes Techniques
et Economiques (SETEC)
15, Quai Paul Doumer
92 COURBEVOIE
Professor D.L. MUNBY
Reader in Transport Economics
Nuffield College
OXFORD
Professor Dr. H. St. SEIDENFUSS
Direktor des Instituts
fur Verkehrswissenschaft
an der Universitat Munster
Am Stadtgraben 9
44 MUNSTER (Westf.)
Monsieur VITTORELLI
Direction Gen£rale des Transports
Commission des Communaut6s Europ6ennes
170, rue de la Loi
BRUXELLES 4
J.E. KORSAETH Secretariat
Economist, Consultant
REMARKS ON CRITERIA FOR INFRASTRUCTURAL
INVESTMENT IN DEVELOPED ECONOMIES
Paper by
Dr. Gerd ABERLE,
University of Cologne
REMARKS ON THE PROBLEMS OF FORMULATING CRITERIA
, FOR INFRASTRUCTURAL INVESTMENT IN DEVELOPED ECONOMIES
lo In the Federal Republic of Germany, which will be used as
an example of a developed economy in this paper, no economically
consistent criteria can be observed in the planning of infra-
structural investment. This observation leads to another,
namely, that at present such investment criteria do not exist
in a form that can be manipulated by the administration. Where¬
as in development literature numerous "strategies" paying
special attention to planning of transport infrastructures(1)
have often been formulated for the developing economies, similar
criteria for developed economies are lacking.
2. The special problems arising in the formulation of
transport infrastructure policy in developed economies, in
contrast to those of developing countries, derive from the
following characteristics:
(a) In the past the structure of industry has developed
along many different lines. At present we find only sectoral
modifications in the location pattern. In general, infra-
structural installations are adapted to existing structures at
economical focal points.
(b) The transport network has been gradually built up
over the centuries and cannot therefore be altered at will.
Consequently any infrastructural investment to be made now and
in the future is to be regarded as complementary investment.
Moreover, it should be noted that continual reinvestment
(1) Cf. i.a., Nurkse, R., Problems of Capital Formation in
Underdeveloped Countries, 4th ed. , Oxford, 1955, p. 6 et
seq;
Rosenstein-Rodan, P.H., Problems of Industrialisation of
Eastern and South-Eastern Europe, in: Studies in Economic
Development, publ. by B. Okum and R. Richardson, New York,
Chicago, 1964, p. 124, et seq. ;
Hirschmann, A.O., The Strategy of Economic Development,
New Haven, 1958.
produces rationalization effects (embodied technical progress)
leading to an increase in the productivity of existing installa¬
tions (e.g. adaptation of railway infrastructure to heavier
trains and faster travel, larger dimensions of canal locks to
permit pusher techniques and reduce waiting).
(c) In the past - at least as regards road and inland
waterway networks - the users of such infrastructures have borne
little or no part of their cost. This practice did not derive
from any specific pricing policy (e.g. pricing on the basis of
marginal costs), but rather from general political considera¬
tions dating back to the time when the German Reich was crossed
by independent railways belonging to the LSnder, which competed
with each other and regarded waterways as an extension of the
railways. In addition to this there were the provisions of the
Mannheim Act on Navigation of the Rhine which, for reasons of
competition, were also extended to artificial waterways.
Secondly, lines of communication were deliberately built to
promote the industrialisation of certain regions, and their cost
was borne largely by the State. Accordingly, the provision of
infrastructures free of charge or at a price far below the
average cost has had a considerable influence on the structure
of the transport undertakings using them. Consequently, any
measure of infrastructural policy, relating either to investment
or user pricing, must take account of these inherited features,
for a study of new projects in isolation allows significant
externals to appear.
(d) In developed economies the construction of infra¬
structures always produces substitution effects insofar as, in
the case of the new infrastructure, pricing on average costs is
dropped in favour of pricing on marginal costs (in the event of
underemployment of the new capacity). These substitution
effects lead to substantial changes in the economic situation of
the transport undertakings using the existing infrastructures,
to which they may be tied technically and/or organisationally.
(e) In developed economies investment in transport
infrastructure is intended to have an effect beyond the trans¬
port sector. Consequently, and because of the competition
between undertakings, changes in their respective positions on
the market are possible. If an infrastructural project
(e.g. construction of a canal) is essentially motivated by