Do new roads encourage economic growth?

You may have picked up the news last week about the roads protests near Hastings. It’s been a while since we had such an entrenched protest against a road being built, the Newbury Bypass being the famous one in the 90s. It may not be the last one, considering the government’s appetite for new roads. Mr Osborne announced a series of new roads in his autumn budget update, with more to come.

It’s not a new idea. In 1989 Margaret Thatcher’s government published a paper called ‘Roads for Prosperity’, which made bold claims about how the car economy could drive economic growth. The plan was to double Britain’s trunk road capacity, and double car usage too. Much of it didn’t get built in the end, and the Conservative government abandoned the vision in 1996. The change of heart was partly due to political protest over the new roads, (including the aforementioned Newbury project) partly the expense, and partly because it was clear that investment in public transport was a greater priority.

It had also emerged that the fundamental premise of the ‘Roads to Prosperity’ vision was false – roads don’t necessarily have a positive effect on economic growth. The government had set up a committee to investigate this ahead of the change in policy. The Standing Advisory Committee on Trunk Road Assessment (SACTRA) reported in 1996 and 1997 and their report is still online. This is from the executive summary:

“Some authors have claimed that national programmes of public investment, including road construction, lead to high rates of social return measured in terms of economic growth and productivity improvement. Other authors suggest that such effects do occur but on a smaller scale than has been claimed, and that, in general, any contribution to the sustainable rate of economic growth of a mature economy, with well-developed transport systems, is likely to be modest. Our investigations support the latter assessment.”

The report suggests that there are plenty of reasons to believe that more roads should stimulate economic growth, but only in theory. When you actually go looking for empirical evidence, there’s very little to find. “We conclude that the theoretical effects listed can exist in reality” says SACTRA, “but that none of them is guaranteed. Our studies underline the conclusion that generalisations about the effects of transport on the economy are subject to strong dependence on specific local circumstances and conditions.”

Since this research was commissioned by a Conservative government, perhaps our Conservative transport secretary and chancellor might like to peruse it at some point before giving the green light to a new road building programme.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: