The ripple effects of large-scale transport infrastructure investment

We analyse the general equilibrium effects of an asymmetric decrease in transport costs, combining a large scale spatial dynamic computable general equilibrium model calibrated on all the European NUTS 2 regions with a detailed transport model at the level of individual road segments. As a case study we consider the impact of the road infrastructure investments in Central and Eastern Europe in the context of the EU cohesion policy programme. Our analysis suggests that the decrease in transportation costs benefits the regions targeted by the policy via substantial increases in GDP and exports compared to the baseline, and small increases in population. The richer, Western European non-targeted regions also enjoy a higher GDP after the investment in the East, but these effects are smaller. Thus, the policy reduces interregional disparities. There are rippled patterns in the predicted spillovers of the policy. In non-targeted countries, regions trading more intensely with regions where the investment is taking place on average benefit more compared to other regions within the same country, but also compared to neighbouring regions across an international border. This is due to these latter regions facing increased internal competition from regions within the same country that are located even closer to the regions receiving the funds.

PERSYN Damiaan;  BARBERO JIMENEZ Javier;  DIAZ-LANCHAS Jorge;  LECCA Patrizio;  MANDRAS Giovanni;  SALOTTI Simone; 

2023-09-18

WILEY

JRC127199

0022-4146 (online),   

https://onlinelibrary.wiley.com/doi/10.1111/jors.12639,    https://publications.jrc.ec.europa.eu/repository/handle/JRC127199,   

10.1111/jors.12639 (online),