Come in here dear boy, have a cigar. You're gonna go far if you've got the latest transportation must-have: high-speed rail. As you probably know, China is in the vanguard of high-speed rail technology almost alongside the Europeans and the Japanese after investing tonnes and tonnes of dough in this technology. Governator Arnold Schwarzenegger of California even dreams of groping--I mean, availing of--some high-speed trains from the PRC with what should be incredibly funky Chinese financing given the perpetually empty coffers of the, ahem, "Golden State" (so ironic, that).
However, the purpose of today's post is not to heap more well-deserved dirt on the festering carcass of American hegemony, but to instead contemplate high-speed rail's benefits for those still in the land of the fiscally living. Sometime ago, I discussed China's vaunted proposals to establish a high-speed network linking a New Silk Road. Years and years of rapid Chinese growth despite all the acknowledged pitfalls of doing business in that country--corruption, pollution, and so on--suggest to me that infrastructure is important.
While visiting the LSE home page, an interesting feature caught my eye coming from a colleague in the Geography department--the same folks who recently brought us the iPhone happiness app that's caught a fair amount of media attention. Its findings come from a study of the economic effects of linking the German towns of Köln and Frankfurt by high-speed rail. Here's the press blurb:
High-speed rail lines bring clear and significant economic benefits to the communities they serve, the first thorough statistical study of the subject has discovered. Economists discovered that towns connected to a new high-speed line saw their GDP rise by at least 2.7 per cent compared to neighbours not on the route. Their study also found that increased market access through high-speed rail has a direct correlation with a rise in GDP – for each one per cent increase in market access, there is a 0.25 per cent rise in GDP.Very interesting stuff, and it certainly bodes well for China and the rest of Asia that it plans to link up with the PRC via high-speed rail. There's an ungated version of the paper available online if you're further interested. And did we tell you the name of the game, boy? We call it 'Riding the Gravy Train.'
The findings, from the London School of Economics and Political Science and the University of Hamburg, may be used to support arguments for high-speed networks which are already being planned in the UK, US and across the world. Until now, no one has demonstrated that high-speed rail brings clear economic gains along its routes.
Authors Gabriel Ahlfeld and Arne Feddersen presented their findings at the conference of the German Economic Association. The paper, From Periphery to Core: economic adjustments to high-speed rail, also points to advantages in employment and GDP per capita for towns on the high-speed network.
Their research focused on the line between Cologne and Frankfurt, which opened in 2002 and runs trains at almost 185mph (300 kmh). The authors looked at the prosperity and growth of two towns with stations on the new line – Limburg and Montabaur – and compared them with more than 3,000 other municipalities in the surrounding regions.
The new line brought Limburg and Montabaur within a 40-minute journey of both Cologne and Frankfurt. Over a four-year period, the researchers found that both towns and the area immediately around them saw their economies grow by at least 2.7 per cent more than their unconnected neighbours.
This effect, say the authors, is entirely attributable to the improved access to markets for Limburg and Montabaur and not to any external factors or inherent growth. They chose the two towns for the study because both were included on the high-speed route due to lobbying by regional government and not because their economies were powerful or expanding.
Dr Ahlfeldt, from the Department of Geography and Environment at LSE, said: 'One of the problems with identifying the impact of high-speed rail has been that lines tend to get built first between areas with strong and growing economies so that it's difficult for economists to be sure which effects are attributable to the new rail line and which to existing factors. But because there was no economic rationale for building the line to Limburg and Montabaur, they provided the perfect "laboratory" conditions for us to measure the effect of high-speed trains.
'It is quite clear that the line itself brought significant and lasting benefits in access to markets, growth, employment and individual prosperity. One of our key findings is a positive market access elasticity, which means that improvements in accessibility to other towns, cities and regions, will be reflected in economic growth. We believe this research develops a new framework for predicting the economic effects of large-scale infrastructure projects and will help governments to define future spending priorities.'