IMPACT OF TRANSPORT INFRASTRUCTURE INVESTMENT ON INTERNATIONAL COMPETITIVENESS OF EUROPE A. Joko Purwanto, Christophe Heyndrickx, Jan Kiel, Ofelia Betancor, M. Pilar Socorro, Aday Hernandez, Juan Luis Eugenio, Barbara Pawlowska, Przemyslaw Borkowski, Ralf Fiedler

Background: Economic Crisis & Change of European Strategy

Lisbon: • Most competitive & dynamic • Sustainable economic growth • More & better jobs • Greater social cohesion

Europe 2020: • Smart, sustainable, inclusive growth • Greater coordination of national and EU policy

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Objectives • to clarify relationship: transport infrastructure investment - its wider economic impacts, i.e. competitiveness & economic growth • to synthesize methodological improvements used to assess the impacts of investment in transport infrastructures

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Methodology

Case studies: No. 1 2 3

Literature Review: Basic concept, definition, indicator frameworks, measurements,…

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Literature Review: Transport: TRANSTOOLS, Vaclav, WCM,… Econ: SASI, ASTRA, CGEurope, Rhomolo

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Project name

Short Remarks

Country/Countries

European region

Amsterdam Orbital

Completion of the A10 orbital by opening of Zeeburgertunnel

Netherlands

Western

Betuweroute

Freight Rail

HSL Zuid

High speed passenger train Amsterdam-Brussels

Netherlands, Germany Netherlands, Belgium

Western Western

Eurotunnel

Railway tunnel

UK, France

Western, Northern

Storebelt Bridge

Road-Rail Bridge Development

Denmark

Northern

Spanish HSR network

Passenger high speed train

Spain

Southern

Malaga Airport

Airport development

Spain

Southern

A20 Baltic Sea Motorway

Motorway

Germany

Western

Magdeburg Waterway Crossing

Inland waterway

Germany

Western

Öresund Bridge

Motorway-railway bridge

Sweden, Denmark

Northern

Southern bypass of Gdańsk Gdansk Lech Walesa Airport E-59 Poznań-SzczecinŚwinoujście

Express road

Poland

Eastern

Airport development

Poland

Eastern

Railway line

Poland

Eastern

Maasvlakte 2 Rotterdam

Port development

Netherlands

Western

Deurganckdok Antwerp

Port development

Belgium

Western

Container Terminal Altenwerder, Hamburg

Port development

Germany

Western

Vidin-Calafat Bridge

Road-Rail Bridge Development

Bulgaria, Romania

Eastern

Countries on the track of the rail link between Germany and Greece Belgium, Netherland, Germany Poland, Lithuania, Latvia, Estonia

Western, Eastern, Southern

Corridor 22

Railway line

Iron-Rhin

Railway line

Rail Baltica

Rail

Twente Mittelland canal

Inland Waterway

The Netherlands

Western

Crossrail

Railway line

UK

Western, Northern

HS2

High speed rail

UK

Western, Northern

Waterway

Germany

Western

Inland waterway

Germany

Western

Außenweser shipping fairway (extension) Stichkanal HannoverLinden (extension)

Western Eastern

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Framework: the definition • The World Economic Forum: the set of institutions, policies, and factors that determine the level of productivity of a country (Porter et al., 2007, Schwab & Sala-i-Martín, 2012, p. 4)

• This paper: the extent to which firms in a particular region can compete with those elsewhere. Critical factors for competitiveness are those that determine the level of productivity in a region in relation to other regions.

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Framework: the triangle

Competitiveness triangle of Gardiner et al. (2004).

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Framework: transport’s roles • IMD’s World Competitiveness Yearbook: transport infrastructure investment as basic infrastructure sub-factor …

• WEF’s Global Competitiveness: …..ensuring the effective functioning of the economy

• Cambridge Econometrics: Importance of an adequate infrastructure capacity in supporting various activities within a region …

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Framework: from Aschauer to Krugman

Empirical level - Aschauer (1989): • Keywords: elasticity, public capital. • Focus: core-infrastructure” • Empirical studies might complete traditional costbenefit analysis (CBA)

A more formal spatial economic theory Krugman (1991): Transport costs: a central role in determining the configuration of the economy through the influence on workers and firm’s location decisions, trade flows and regional incomes. 8

Framework: where we can focus? We can focus the role of transport infrastructure investment on competitiveness on questions of accessibility and connectivity. The selected accessibility/connectivity measure should: • include a spatial level (location, region, nation), • include both the supply and demand side of a location, • include both freight and passenger transport, • contain the economic value in order to ease the link to economic variables such as GDP, and finally • be fit for use in forecasts. 9

Proposed improvement 1: combination of micro-macro modelling • -

CBA (microeconomic models): Simple, straightforward Direct effects measurement Unability to capture effects of regions and sectors

• Macroeconomic models: - Ability to handle effects of regions and sectors - Complicated • Advantageous to use both types of models, i.e. using the macro level for a broader quasi-dynamic and interactive context, and CBA for factors absent from the macro models.

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ProposedGráfico improvement 2a: 3.13 Mercado competitivo y mercado de transporte focus on final market p qs

qd q

q0

0 c

c(q)

0

q0

q

First case: when the final market is not competitive, i.e. transport project will have an impact on the inefficiency of that market Second case: when the affected consumers are not of interest from the point of view of the project assessment according to the nature of funding.

Final markets and transport demand (Source: De Rus (2008)) 11

Proposed improvement 2b: focus on employment and welfare (1/2) • Economic agents to be identified into several types (e.g. consumers, capital owners, labour owners, land owners, taks payers, and the rest of the society) (De Rus, 2010) • Social welfare is the addition of all agents’ surpluses: SW=CS+GS+OS+LS+RS+ES Where: SW= social welfare. CS= consumers surplus GS=tax payer surplus OS= owners of capital surplus LS= owners of labour surplus RS= owners of land surplus ES= other agents surplus, or the value of external effects.

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Elements of Conclusion •

Competitiveness is among one of the wider economic benefits of transport infrastructure investment.

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Competitiveness: the extent to which firms in a particular region can compete with those elsewhere.

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We can focus the role of transport infrastructure investment on competitiveness on questions of accessibility and connectivity.

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First recommendation: combination of micro-models and macro-models

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Second recommendation: (a) in term of linkage between transport and the final market. Two cases: (i) when the final market is not competitive, (ii) when the affected consumers are not of interest from the point of view of project assessment according to the nature of funding. (b) in term of project impacts on unemployment: we suggest that analysis emphasizes on the labour force surplus, and rather than on the number of workers.

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THANK YOU [email protected] The paper and its presentation is based on the I-C-EU project results. I-C-EU stands for Impact of transport infrastructure on international competitiveness of Europe. This was a project funded by the European Commission (Directorate General - Research and Innovation) in the 7th Framework Programme.

I-C EU

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