Transportation Performance Index: The U.S. Economy

Sunday, August 5, 2012 - 8:00pm

The econometric analysis using the Transportation Performance Index is unique because it examines the overall contribution to economic growth from well-performing transportation infrastructure. It goes beyond charting only the effects of spending and the creation of jobs during construction. The analysis provides robust, stable results showing that the transportation performance is important to maintaining a strong economy.

Underperforming transportation infrastructure produces a drag on prosperity. For each single point of improvement in the transportation index, GDP would increase by 0.3%. In other words, allowing the nation’s overall transportation performance to lag behind the average index of the top five states leaves about $1 trillion of potential GDP on the table. This amount would be additive to the economic value of direct infrastructure investment. If investments are made that improve performance, the real long-term impact on the economy could be one-third higher than what most other economic impact studies estimate.

There is also a positive relationship between foreign direct investment (FDI) that opens new establishments in the United States—creating new jobs—and the performance of transportation infrastructure as measured by the index. FDI established new enterprises that created more than 300,000 jobs in the United States in 2008 (Anderson 2008) and may be more dependent on transportation infrastructure than other types of infrastructure because of the need to move goods and people between the foreign country and the United States. According to studies done by the Bureau of Economic Analysis, most of what these firms import and about half of what they export is shipped from and to the parent company in the foreign country, making transportation infrastructure an important element of their location decision.

The results indicate that a commitment to raising the performance of transportation infrastructure provides positive long-term value for the U.S. economy.