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1 Transport and City Competitiveness - Literature Review Contents Executive Summary .......................................................................................................2 1 Introduction .................................................................................................................5 1.1 Study Background.............................................................................................................. 5 1.2 Structure of this Review..................................................................................................... 5 2 Overview of the Literature .........................................................................................6 2.1 Literature Scope and Focus ................................................................................................ 6 2.2 What is City Competitiveness? .......................................................................................... 8 2.3 The Role of Transport in Competitiveness ...................................................................... 12 3 Summary of Findings ................................................................................................14 3.1 The Method of Review: Summary Tables ....................................................................... 14 3.2 Summary of Findings ....................................................................................................... 14 3.3 An Integrated Package ..................................................................................................... 20 4 Previous Research Methodologies ...........................................................................21 4.1 An Under-Developed Research Field .............................................................................. 21 4.2 Previous Research Methods ............................................................................................. 22 4.3 A Methodological Framework ......................................................................................... 24 4.4 Conclusions ...................................................................................................................... 29 Annexes .........................................................................................................................31 Annex 1: Acknowledgements ................................................................................................ 31 Annex 2: Glossary.................................................................................................................. 31 Annex 3: Previous Banister & Berechman Research............................................................. 32 Annex 4: Literature Review Method ..................................................................................... 35 Annex 5: References .............................................................................................................. 37

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Transport and City Competitiveness - Literature Review

Contents

Executive Summary .......................................................................................................2

1 Introduction .................................................................................................................5

1.1 Study Background.............................................................................................................. 5

1.2 Structure of this Review..................................................................................................... 5

2 Overview of the Literature .........................................................................................6

2.1 Literature Scope and Focus................................................................................................ 6

2.2 What is City Competitiveness? .......................................................................................... 8

2.3 The Role of Transport in Competitiveness ...................................................................... 12

3 Summary of Findings................................................................................................14

3.1 The Method of Review: Summary Tables ....................................................................... 14

3.2 Summary of Findings....................................................................................................... 14

3.3 An Integrated Package ..................................................................................................... 20

4 Previous Research Methodologies ...........................................................................21

4.1 An Under-Developed Research Field .............................................................................. 21

4.2 Previous Research Methods ............................................................................................. 22

4.3 A Methodological Framework ......................................................................................... 24

4.4 Conclusions...................................................................................................................... 29

Annexes .........................................................................................................................31

Annex 1: Acknowledgements ................................................................................................ 31

Annex 2: Glossary.................................................................................................................. 31

Annex 3: Previous Banister & Berechman Research............................................................. 32

Annex 4: Literature Review Method ..................................................................................... 35

Annex 5: References .............................................................................................................. 37

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Executive Summary

Author: Llewelyn-Davies, with Professor David Banister and Professor Sir Peter Hall of the Bartlett School of Planning, University College London.

Publication Date: January 2004.

DfT contact: Jason Teal. [email protected]

1. Improved city competitiveness is a much sought after property of most economies, however there remains little agreement either on what the term competitiveness means or on how policy intervention should try to enhance it. The range of potential factors influencing city competitiveness is potentially very wide, with transport clearly playing an, as yet, undefined role in providing for the 'right business environment'.

2. Hence, the Department for Transport (DfT) and Office of the Deputy Prime Minister (ODPM) commissioned Llewelyn-Davies, with Professor David Banister and Professor Sir Peter Hall of the Bartlett School of Planning, University College London, to carry out a review of existing research and evidence regarding the role of transport in city competitiveness.

3. Below we outline the key issues that have developed during our review of the literature field.

4. City competitiveness: there are a variety of interpretations and definitions, including Porter's (1990) diamond of competitive advantage; consisting of factor conditions, demand conditions, related and supporting industries and firm strategy and rivalry; and Begg's (1999) competitiveness maze; including standard of living, employment rate, productivity, macro influences, company characteristics, the business environment, and capacity for innovation and learning.

5. Empirical research directly assessing the role of transport in city competitiveness is relatively scarce. There are two related but distinct research fields, which do not quite answer the issue we are hoping to address, and which are not particularly well integrated:

The first looks at the typical components of city competitiveness, without directly quantifying the role of (amongst other things) transport investment.

The second directly addresses the developmental impact of transport investment, but goes no further in assessing transport's potential contribution to city competitiveness.

6. Bearing in mind these caveats, there is a wide and expanding literature field addressing the two particular topics. The research is international in nature, with many of the better empirical studies carried out in the USA and Canada. Many of these concentrate on transport's impact on development, and usually particular impacts on the property market. Empirical evidence from the UK and rest of Europe is more varied, but does include a number of individual ex-post and ex-ante case studies, comprehensive reviews, and, indeed reviews of reviews. A lot of work is dated and, as ever, there is a problem with appropriate data availability. There is little in the way of time series data or before and after studies.

7. There are numerous interpretations of transport's role in promoting city competitiveness, and we outline the broad differences in perception as below:

Some authors claim that investment, including road construction, leads to high rates of return, measured in terms of economic growth and productivity improvements (see, for example; Clark, 1957; or Baum and Behnke, 1997);

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Others are more cautious, stating that effects do occur, but on a much smaller scale than has been claimed, and that, any contribution to the sustainable rate of economic growth in a more mature economy, with well-developed transport systems, is likely to be modest. Potential direct and indirect effects are differentiated (see, for example, SACTRA, 1999; Banister, 1998 and Vickerman, 1999).

The more sceptical viewpoint has, to a certain extent, developed as a critique of the road building agenda (Whitelegg, 2000), and concerns over the environmental impacts of road schemes, as well as doubts as to claims of economic benefits. Few evaluations cover all the issues relative to city competitiveness.

8. In the specific city competitiveness literature field, transport is not often reported as being a critical component of competitiveness. More important factors are: factor conditions, demand conditions, related and supporting industries, and firm strategy, structure and rivalry (Porter, 1990). But, transport clearly still has a role to play in providing for the 'right business environment'.

9. In the transport investment and developmental impact field, there are a number of outstanding issues:

Does investment in transport have a significant impact on urban development? And, if so, by how much? Previous research finds it difficult to judge regeneration impact, but broadly suggests:

Air: regional, and at times, international impacts (PIEDA, on the potential/alleged impacts of Heathrow, 1995 and more generally, Llewelyn-Davies, 2000).

Heavy Rail: regional impacts in terms of the potential (re)distribution of development. Can work in favour of urban cores rather than exurban areas where combined with other strategies, e.g. TGV in Lyon and Lille (Banister, 2000).

Light Rail Transit: investment appears to have an impact on local urban development (Hack, 2002 and Ryan, 1999). However, most research studies experience difficulties in quantifying how much development is directly caused by the transport project in question, relative to other planning policies or general economic market conditions.

Road: increasingly disputed evidence as to positive economic impacts (SACTRA, 1999; Banister, 2000; Vickerman, 2000) and some unexpected impacts such as the two-way road effect (SACTRA, 1999; and Goodwin, 2000).

River Crossings: some evidence of potential large developmental impacts, especially where new infrastructure makes large accessibility changes (Banister and Berechman, 2000).

Pedestrian and cycle: local, but still important, impacts in terms of local urban design quality, network permeability, city attractiveness (Pharoah, 1992 and 1996; TfL, 2002).

Why is there more impact reported for some schemes than others, e.g. development around some LRT stations, and in some cities, than others?

Urban LRT tends to relate directly to development that can take direct advantage of it, and a number of supporting measures need to be in place, such as the availability of attractive development sites, supportive planning policies and strong local economies (Hall and Hass-Klau, 1985).

10. Little research covers the efficiency of existing networks (except perhaps Prud'homme, 1999 and Darbéra, 1995 in the Paris and London comparative studies). Most research concentrates on new transport investment and likely developmental effects.

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11. In terms of appropriate study methods; there is a range of techniques used, at various scales of analysis, including trend-based extrapolation, modelling (e.g. LUTI, CGEM, etc.), accessibility mapping, qualitative surveys and growth assessments. Ex-post studies appear to be more valuable and robust than some ex-ante forecasts, especially where the latter are promotional in nature. Few studies even get to, never mind go beyond, regression analysis. The factors that are important to city competitiveness and the urban renaissance agenda are very difficult to measure, such as city image, impact on investment, urban structure, and are also likely to have a large time lag in terms of measurable developmental impact. At the moment these are not being picked up in the research or in economic appraisals of transport investment schemes. More ingenious techniques are required to pick up the impacts, including longitudinal impacts, on urban renaissance. These are however likely to be data-intensive, Goddard-style empirical research studies considering impacts on the local area.

12. Difference in scale appears to be important: regional facilities versus local, e.g. airports/major investment may have an impact on city-wide competitiveness, smaller investments (e.g. LRT) may have more local impact. It is at this lower level on the scale that transport investments may be targeted best as a social catalyst; to help to implement the urban renaissance agenda. But also, this level is difficult to measure because of the large number of factors at play in promoting competitiveness.

13. There are severe difficulties in attributing causality - rates of new firm formation, levels of investment in research and development and attraction of foreign direct investment might all be self-evident indicators of city competitiveness. The important issue however, is in understanding what factors underlie competitiveness, and the range and scale, and indeed direction, of influence.

14. In conclusion, in reviewing the transport and city competitiveness literature field, we found that there is, as yet, no accepted definition of city competitiveness. The relationship between transport and city competitiveness is in need of much more detailed and systematic research. This is especially so in terms of the impact of transport on:

Economic performance: including economic growth, agglomeration and clustering, productivity, employment and ability to attract inward investment.

Social cohesion: social equity, social connectedness and community and social order.

Urban attractiveness: environmental quality, public space quality, city liveability, vitality and viability and city and area image.

15. It cannot be simply assumed that the impact of any transport investment in any area will be positive (or negative) in respect of city competitiveness. Future research should concentrate on refining and clarifying the competitiveness concept. This should aid policy makers in defining more precisely what their objectives are in this area, i.e. a focus on the meaning of competitiveness in relation to the sought outcomes of city and city-region policy. This will include further assessment of the potential menu of measures; which include a range of transport investments; and also wider measures such as training, improving the design of the built environment; and fostering inclusiveness of all social groups. Critical to the success of future city competitiveness will be a greater understanding of the optimum packaging of the menu of measures, specific to each city or city-region.

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1 Introduction

1.1 Study Background

The Department for Transport (DfT) and Office of the Deputy Prime Minister (ODPM) commissioned Llewelyn-Davies, with Professor David Banister and Professor Sir Peter Hall of the Bartlett School of Planning, University College London, to carry out a review of existing research and evidence regarding the role of transport in city competitiveness. A sister project is being carried out by Napier University on Understanding Business Locations.

The literature review comprises two key sections, as outlined below:

A comprehensive overview of existing evidence regarding the role of transport in city competitiveness;

Commentary on existing methods that have been used in research studies, with recommendations for future enhancement;

A broad interpretation of competitiveness will be used to cover both the economic aspects, including employment levels, type of employment, inward investment and output measures such as productivity, and the social aspects, including attractiveness of location, quality aspects and social structure.

1.2 Structure of this Review

The remainder of this paper is structured as follows:

Section 2: Overview of the literature: including discussion on scope and focus of previous research studies, definitions of city competitiveness and debate as to transport's potential role in promoting city competitiveness.

Section 3: Summary of findings: a review of the literature using key themes in city competitiveness, such as economic performance, social cohesion, urban attractiveness, spatial impact and mode of investment.

Section 4: Previous study methodologies: commentary on previous study methods.

The paper is supported by five annexes:

Annex 1: Acknowledgements

Annex 2: Glossary - an explanation of the jargon common in the literature.

Annex 3: Previous Banister & Berechman Research.

Annex 4: Literature review method.

Annex 5: References - including key sources and the wider literature.

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2 Overview of the Literature

2.1 Literature Scope and Focus

The desire to analyse the growth of cities, to understand what factors lie behind the differing rates of city development, and then move on to project urban futures, goes back, at least, to the times of the biblical prophets and Plato's description of the ideal city-state in 'The Republic'. The range and variety of possible futures is great: Marshall McLuhan in the 1960s famously suggested the whole world would become a 'global village', whilst apocalypse futures have famously been depicted in print and on film; for example: George Orwell's 1984, Aldous Huxley's Brave New World, and Ridley Scott's Blade Runner.

The process of globalisation is, of course, central to these debates. Changes in the way economic activities are organised are well versed. However, as yet, the role of transport in facilitating these changes is ill-defined. Most recently, economic forces have been supplemented by technological changes, which have allowed many transactions to be carried out simultaneously and remotely through broadband communications. The quantity and speed of transactions have increased exponentially. A number of authors discuss these issues, the most notable being Castells (1993 and 1998), Downs (1989) and Sassen (1994). The economic and technological revolutions have placed new requirements on cities and their competitiveness. Location attractiveness now arguably depends not so much on geography, but on the knowledge and skills levels of the population and access to high quality transport and communications infrastructure. Although many transactions can be carried out remotely, face-to-face contact appears to be becoming increasingly important, hence the continuing need for travel.

Cities around the world are undergoing fundamental change. A number of publications provide classic historical context for city development in the western world. These include Soja (2000) Postmetropolis, Hall (1998) Cities of Tomorrow and (2002) Cities in Civilisation, and LeGates and Stout (2000) The City Reader.

In some cases, cities have decentralised, with many routine activities contracted out or carried out remotely (from, for example, home or low cost locations). The power of agglomeration however still seems to be powerful, with many activities clustering together so that economies of scale and scope can be achieved. This is true both in the context of production and in the provision of personal services (e.g. banking and health, etc).

Apart from the continued attractiveness of accessible city centres that offer a high quality of life and a range of services and facilities, a new set of locations have appeared. These clusters of innovation are also looking for accessible locations on the motorway network, preferably also close to an international airport. It is in these locations that intensive development pressures have occurred for high-tech industries and financial service providers.

In contemporary UK, many urban areas are moving away from a dependence upon the traditional manufacturing base towards more service and information based activities. Much of the manufacturing industry has migrated to the newly industrialised countries where labour costs are low and where there is considerable potential for learning and skills enhancement. Former industrial cities in advanced economies, such as the UK, have increasingly reoriented their economies, consolidating on services industries such as financial services, command and control functions, media and creative activities, and activities related to consumption and tourism.

With these trends as context, our review has identified 28 key references concentrating on the role of transport in promoting city competitiveness, as listed below:

Banister, D. (ed.) (1995) Transport and Urban Development. London: E & FN Spon.

Banister, D. and Berechman, J. (2000) Transport Investment and Economic Development. London: UCL Press.

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Bartlett School of Planning for ODPM/RICS (Marshall, S. and Banister, D., 2002) Land Value and Public Transport.

Bartlett School of Planning for ITC (Marshall, S. and Hall, P., 2002) Land Use Effects of the 10-Year Plan.

Begg, I. (1999) Urban Competitiveness: Policies for Dynamic Cities, Policy Press.

Boarnet, M & Haughwout, A. (2000) Do Highways Matter?: Evidence and Policy Implications of Highways' Influence on Metropolitan Development Brookings Institution Central

Boddy, M., Lambert C., French S. and Smith I (1999) Bristol Business Survey: Central and North Bristol undertaken within the ESRC Cities, Competitiveness and Cohesion Research Programme

Buck et al (2002) Working Capital. Life and Labour in Contemporary London, Routledge.

Castells, M. (1993) European Cities, the Informational Society and the Global Economy.

Echenique, M. (2001) Mobility and Space in Metropolitan Areas in Cities for the New Millennium London, Spon Press

Hack, J. (2002) The Role of Transit Investment in Urban Regeneration and Spatial Development: a Review of Research and Current Practice. CIP Annual Conference (Canada)

Hall, P. (2002) Cities of Tomorrow. An Intellectual History of Urban Planning and Design in the Twentieth Century, Blackwell.

Hall, P. (1998) Cities in Civilisation, London, Weidenfield and Nicolson.

Huang, H. (1996). The Land Use Impacts of Urban Rail Transit Systems, Journal of Planning Literature, 11(1), pp.17-30.

Kresl, P. (1995) The Determinants of Urban Competitiveness, in Kresl, P. and Gappert, G. (eds) North American Cities and the Global Economy: Challenges and Opportunities, Urban Affairs Annual Review 44.

Krugman (1996) Pop Internationalism, Cambridge Mass, MIT Press.

Llewelyn-Davies for TfL (2002) Thames River Crossings: Economic and Regeneration Impacts - Literature Review.

Llewelyn-Davies, UCL Bartlett School of Planning and Comedia (1996) Four World Cities DETR

Oxford University, Transport Studies Unit (2002) Impacts of Road Use Charging/Workplace Parking Levy on Social Inclusion/Exclusion, Report on Literature Review.

Porter, M.E. (1990) The Competitive Advantage of Nations, London, Macmillan.

Prud'homme, R. and Lee, C. (1999) Size, Sprawl, Speed and the Efficiency of Cities, Urban Studies, Volume 36 No. 11, pp. 1849-1858.

Ryan, S. (1999) Property Values and Transportation Facilities: Finding the Transportation-Land Use Connection, May, Journal of Planning Literature, Volume 13 Issue 4 pp. 412-427.

SACTRA (1999) Transport and the Economy, HMSO, London.

Sassen, S. (1994) Cities in a World Economy.

Schumpeter, J.A. (1911/61) The Theory of Economic Development. Cambridge, Massachusetts, Harvard University Press.

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Storper, M. (1995) The Resurgence of Regional Economies, European Urban and Regional Studies, 2.

Vickerman, R., Spickermann, K. and Wegener, M. (1999) Accessibility and economic development in Europe, in Regional Studies, 33, pp. 1-16.

Vickerman, R. (2001) Transport and Economic Development, Round Table 119, Economic Research Centre.

A wider reference list has been identified during the review, with over 300 related articles and publications. These are listed in the Annex.

2.2 What is City Competitiveness?

Improved city competitiveness is perhaps the new, or indeed not so new, holy grail. It is a much sought after property of most economies. As cities increasingly engage in competition with each other at different levels, the determinants of competitive advantage are coming under intense scrutiny. Numerous economic development strategies all start from the premise that 'something can be done' to make an economy more competitive (Begg, 1999).

The European Commission has a Competitiveness Advisory Group (Jacquemin and Pench, 1997), the US has a Special Commission for Competitiveness and the UK Government has produced a series of White Papers on the subject in the last 20 years.

However there remains precious little agreement either on what the term competitiveness means or on how policy should aim to enhance it.

The recent ESRC Cites Programme1 aimed to tackle this issue and has started to provide useful outputs in terms of actually defining what we mean by city competitiveness. We return to this work later in this section.

Prominent economists such as Krugman (1996a and 1996b) have been highly critical of the current fashion for promoting competitiveness, arguing that it is little more than a facet of mercantilism and, thus, a threat to aspirations of free trade. Krugman's view is that competitiveness is an attribute of companies not of cities, regions, countries or continents. Others, of course, disagree. Porter (1996 and 1998) in his seminal studies of competitive advantage deplores the lack of attention to competitiveness in international trade theory. He notes that:

"What became clear ... was that there was no accepted definition of competitiveness." And goes on to define competitiveness as "At a national level ... an outcome of the ability to innovate in order to achieve, or maintain, an advantageous position in a number of key industrial sectors."

The literature on competitiveness has expanded rapidly, and in Table 2.1 we provide a flavour of the evolving different viewpoints.

Table 2.1: Perceptions of and Issues Surrounding Competitiveness

Author Key Issue

Ohlin, 1933; North, 1955; Tiebout, 1956; Richardson, 1969

Export base theory: a region's growth is determined by the exploitation of natural advantages and the growth of the regional export base.

1 For further information see www.esrc.ac.uk

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Coase, 1960 The organisation of productive assets in a firm gives rise to the analysis of the firm as a unit of production.

Schumpeter, 1939 Schumpeter's famous process of creative destruction; necessarily involves bursts of urban construction, both in building basic infrastructure, particularly in new transportation systems, and in the new commercial and residential development that follows the opportunities thus created

Porter, 1990 Suggested a 'diamond' of competitive advantage: consisting of factor conditions; demand conditions; related and supporting industries; and firm strategy, structure and rivalry. Chance and government intervention may also play a contributory role. These determinants are mutually dependent, with each often influencing the effects of others. Porter's analysis is novel, for an economist, as he stresses that very often non-economic variables, like social and political history and values, affect competitive success.

Porter, 1990 and 1996 Cluster theory: the phenomenon of industry clustering is so pervasive that it appears to be a central feature of advanced national economies.

The only meaningful concept of competitiveness at the national level is national productivity

Putnam, 1993 Famously reports on the difference in civic tradition between northern and southern Italy: the first with a rich network of cooperative association, the latter based on dependent patronage - "Economics does not predict civics, but civics does predict economics, better than economics itself."

Storper, 1995 Competitiveness reflects the capability of an economy to attract and maintain firms with stable or rising shares in activity, while maintaining stable or increasing standards of living for those who participate in it.

Amin and Tomaney, 1995 Competitiveness depends on the ability to sustain changes in the factors that give rise to productivity growth (technology, human resources, etc.) and also the structure of the economy and how policy seeks to shape it. Hence investment in human and physical capacity is important as well as institutional and organisational change.

Boltho, 1996 Competitiveness equated simply with the real exchange rate.

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Ciampi, 1996 Competitiveness is not a 'zero sum game' ... an increase in competitiveness in one country does not come at the expense of another. On the contrary, gains in productivity and efficiency in different countries can and must be integrated and mutually reinforcing.

OECD, 1997 For a nation, competitiveness reflects the degree to which it can, under free and fair market conditions, produce goods and services which meet the test of international markets, while simultaneously maintaining and expanding the incomes of its people over the long term.

DTI, 1998 For a firm, competitiveness is the ability to produce the right goods and services, at the right price, at the right time. It means meeting customers' needs more efficiently and more effectively than other firms.

European Enterprise DG, 2000 At the level of the economy, innovation is the single most important engine of long-term competitiveness, growth and employment.

Boddy, 2000 Competitiveness and competitive success are commonly seen in narrowly economic terms, particularly in terms of outcomes such as low unemployment, high rates of economic growth, increased productivity and possibly employment growth.

Simmie, 2001 Cities ... trying to foster urban prosperity need two key things - the right highly qualified workforce and firms which function nationally and internationally as well as locally

Begg (1999) brings together these thoughts and provides a framework for considering the various influences on urban economic performance - see Figure 2.1. The range of potential factors in promoting city competitiveness is clearly very wide, and transport plays just one part in providing for 'the right business environment'.

Figure 2.1 The Urban Competitiveness Maze

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(From Begg, 1999)

The Lisbon group (Petrella, 1995) critically point out that there is a risk that an excessive pursuit of competitive advantage will damage the vulnerable and lead to a neglect of other policy aims such as sustainable development or redistribution.

Arising from the 'ESRC Cities: Competitiveness and Cohesion' research programme, Working Capital (Buck et al; 2002) considers competitiveness and social cohesion in the context of the London city-region, spanning experience in the 1980s and 1990s. The argument is built around three themes - 'the urban triangle' of competitiveness, cohesion and governance - which, it is argued, have become the 'mantra' for the new urban agenda. We take this wider definition of city competitiveness, particularly incorporating social cohesion, as the basis for our literature review in the next chapter.

The book develops many of the theories of the political economy school, and considers the importance of internationalisation, agglomeration economies, clustering and new flexible methods of production, building, for example, on the thoughts of Krugman, Porter and Storper. The three themes are unpicked, highlighting how they prevail upon, affect, provide an opportunity for, and inhibit, the growth of London.

The broad thesis of the research is that social exclusion potentially reduces competitiveness; conversely social capital and inclusion can work towards enhancing competitiveness. Critically, a fully-functioning network of governance, linking and integrating the work of varied organisations, can seek to enhance the impact of social capital, sustaining conditions which will ultimately lead to competitiveness and social inclusion; the win-win situation.

The three themes are explored briefly below:

Buck et al start with a synopsis of the debate surrounding competitiveness - what it stands for, how it has been interpreted and how it relates to cities. They look at how cities might act in competition with each other, for markets, private investment, public sector funding and residents, for example (Gordon; 1999a). This phenomenon is not new, but has become more intense, through the growing internationalisation of trade and a shift away from mass production of goods to value-added service activities, requiring high quality environments and labour, and sympathetic pro-competitive governance.

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Michael Porter (1990) is cited as the 'father' of modern city policy. He argues that successful companies were attracted to cities which were able to offer not just the 'traditional' opportunities within the city region, such as resource availability, labour costs, etc., but more qualitative factors, such as quality of environment and labour force and the benefits accrued from clustering and agglomeration. City policy now looks at building upon the advantages of each particular city, building upon business-related infrastructure, ensuring the city is an attractive place for people to work in, and for businesses to operate from, eliminating obstacles to the productivity of growth. With an ever-increasing internationalisation of production, fostering competitiveness is an imperative for governments on a national and regional level.

The second theme of cohesion is itself said to embrace three concepts: social inequality, social connectedness, and community and social order. Policy and decision-makers have linked social inclusion with national competitiveness and prosperity, and have claimed that social exclusion erodes cohesion. Social capital refers to the resources which are obtained through membership of social networks and which in turn affect competitiveness.

The third side of the triangle is governance; how governments respond to urban issues, and in particular since the 1970s, urban decline. Key recent aspects have included the introduction of a range of national programmes seeking to alleviate social exclusion which 'acts as a drag on competitiveness'. And, in London, a change in governance with the establishment of the elected Greater London Assembly and Mayor and the London Development Agency. The urban system is managed on the sub-regional level in the interests of competitiveness and cohesion, and achieved through a new set of interests and agencies not traditionally involved in the public sector such as community and business representatives. Governance is thus part of the same lexicography as 'competitiveness'.

2.3 The Role of Transport in Competitiveness

The fundamental underlying question for this review is whether, or not, transport provides a key input to the process of city development, or indeed city competitiveness. Interestingly, the Working Capital research and much of the rest of the literature concerned directly with city competitiveness, does not include direct analysis on the potential role of/for transport.

This seems to be something of a literature gap. Transportation systems not only facilitate the movement of people and goods, but also have potentially wide-ranging impacts on land use, economic growth and quality of life. Planners and urban designers can, and do, use transportation as a policy instrument to guide growth. Indeed, faced with growing levels of motor vehicle traffic in increasingly suburbanised, decentralised areas, there is particular interest in directing growth at or around rail transit stations2. Much of the literature on transport development planning looks at this narrow aspect; considering what impact new transport investment is likely to have on the surrounding area, in terms of land value and potential regeneration effect. Little research goes further and considers the potential role of transport towards a wider city competitiveness.

Transport is conventionally perceived as a second order variable, in that transport infrastructure has to be present for development, but it is not as important as other considerations relating to location. These include the availability of high quality labour, government incentives and grants, suitable site locations, complementary businesses in the local area, and access to markets. Transport is not a sufficient condition for development, yet if transport is not present, then it is seen as a constraining factor on development.

As mentioned earlier, an interesting recent development is the growth of what is termed the 'knowledge economy'. A major implied implication concerns the generation and exchange of information. Information can now increasingly be exchanged electronically (by telephone, e-mail, fax

2 For the wider literature here, in the UK see Llewelyn-Davies for ODPM (unpublished) Planning and Sustainable Access, or RICS (2000) Transport Development Areas, and in the US, see Calthorpe Associates (1990) for transit-orientated development design guidelines

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and the Web). Though there have been predictions of a major shift in location back to home-based businesses, characteristic of those before the Industrial Revolution, this has not happened to any great extent. Face-to-face interaction, which demands personal movement, is still, apparently, critical; even electronic exchange is people-driven. Hence, agglomeration still matters for most informational services. People have to get to work and many of them need to travel in the course of work. High-quality transport therefore matters to them and to their employers. Even the most enthusiastic advocates of new technology conclude that face-to-face agglomeration will still be vital (Hall, 1998).

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3 Summary of Findings

3.1 The Method of Review: Summary Tables

In this section, we provide a summary of the wide literature field. Instead of the traditional method of literature review, where each author is considered in turn, we assess the literature by particular issues, which are deemed as directly relevant to this study.

The review is thus structured in three different ways:

First, we take typical sub-themes of city competitiveness: economic performance, social cohesion and city attractiveness (as identified earlier in, for example, Working Capital, Buck et al, 20023), and highlight the key research findings under each heading.

Second, we extract findings from the literature by spatial impact: international, regional, city-wide, or locally-specific.

And third, by mode of investment: air, heavy rail, LRT, road, or other means of travel (primarily walking and cycling).

The findings are presented in the following summary tables and typically consist of three types of evidence: (1) original empirical evidence, (2) literature reviews, and (3) reviews of reviews. The primary empirical research, which is relatively scarce, is shown in the summary tables in italics, with the secondary reviews and reviews of reviews and more speculative research in standard font.

3.2 Summary of Findings

There appears to be a widespread belief amongst decision-makers and transport planners that transport development plays a vital role in enhancing economic growth by lowering production and distribution costs, improving labour productivity, stimulating private investments and technological innovations. Also popular is the theory that the availability of fast, reliable and affordable transport has historically been the building block around which cities and regions have developed and flourished. The ability to move people and goods easily and economically is still used to explain the relative economic advantage of regions and states.

Proponents of these views tend to regard planned transport infrastructure investments as a key policy means for generating metropolitan, regional or national economic growth - and also, importantly, the corollary - that the lack of transport investment will necessarily impede future growth and productivity improvements.

However, the available evidence is, at best, rather ambiguous, and clearly we do not inhabit such a 'black and white' world. In many cases these alleged "economic growth impacts" are used to rationalise capital investment projects, even when it is difficult to accept them on the basis of their transport effects.

SACTRA (1999) Transport and the Economy provides the most comprehensive assessment of transport's impact on the economy. They suggest that the main mechanism by which changes in transport could have an effect on the economy is by a change in the costs of movement. A transport improvement is itself defined as:

"Any intervention - whether by infrastructure investment, more efficient transport management, or otherwise - which successfully produces sustained reductions in transport costs, or equivalent improvement in service delivered."

3 Buck et al (2002) would suggest ‘governance’ as their third theme of city competitiveness. We suggest ‘city attractiveness is of more relevance for this study, in line with the wider urban renaissance agenda. Governance however remains an important ‘process’ issue for ensuring city competitiveness.

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SACTRA state that there are a number of important mechanisms by which transport improvements could, in principle, improve economic performance. These include:

Reorganisation or rationalisation of production, distribution and land use.

Effects on labour market catchment areas and hence on labour costs.

Increases in output resulting from lower costs of production.

Stimulation of inward investment.

Unlocking inaccessible sites for development.

Triggering growth which in turn stimulates further growth.

A number of key points are brought out in the SACTRA report:

The lack of any consensus as to transport's role in economic development.

The importance of considering the extent of imperfect competition in the sectors using transport.

The importance of distinguishing the re-distributive effects from net impacts.

The incidence of the "two-way road" effect where transport improvements sought by a region may work against its best interests.

The need to demonstrate clearly the relationship between the wider economic and environmental impacts of any proposal.

In the summary text and tables below, we review the literature by key headings. Figure 3.1 provides a 'mind map' of this analysis.

Figure 3.1: Transport and City Competitiveness

3.2.1 Transport Investment and Economic Performance

Economic Growth

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For some authors, transport infrastructure underpins a virtuous cycle of growth by driving down costs (for example, Baum and Kurte, 2001) although the effect may be subject to a delay (Banister, 2000). For businesses the accessible pool of labour and raw materials may be increased. Consumers are enabled to access the most keenly priced goods, forcing businesses to be more competitive. An increase in office rents at transport hubs is suggested to be the most visible manifestation of the potential for growth (Ryan, 1999). A key question posed by SACTRA (1999) is whether the critical factor is mobility in general, improvements in accessibility, or a growth in road-based traffic?

For other commentators, once a complex transport network is established, local conditions are the key driver of further growth (Berechman, 2001, Grieco, 1994). Investment may simply redistribute economic activity (Vickerman, 2002). Major infrastructure change may have an effect but this represents an expensive investment option (Vickerman, 2001 and 2002). Public resources may have more influence on growth if used in education (Transportation Research Board, 1997).

Agglomeration and clusters

Agglomeration is deemed to increase the productivity of businesses. The debate is framed by a broader discussion of the continuing relevance of spatial implantation. For some the importance of place has been superseded by virtual connectivity (Castells, 1998; Weber, 1968). Transport infrastructure reinforces the trend. Businesses can suburbanise without compromising their access to sources of labour and materials (Boarnet et al, 2000) so location is no longer critical (Lawless, 1999). They may be encouraged to do so by traffic demand policies (Gerrard et al, 2002).

For others, globally significant locations continue to drive economic activity (Sassen, 1994). The value of proximity is currently expressed through the premium pricing applied to office rents where face-to-face meetings are facilitated (Bollinger et al, 1998). Public transport may enable although not cause agglomeration (Hopkins, 1986).

Productivity

Poor infrastructure is believed to increase costs to businesses through congestion or a constrained labour market. The relative contribution of different measures is contested. For some road-based mobility is critical, so demand management measures which limit road based mobility are positioned as damaging to productivity (Echenique, 2001; Baum and Behnke, 1997).

Others use accessibility as the critical input. Public transport is claimed to reduce costs and support productivity (Vickerman, 2001; Darbéra, 1995) although some commentators argue that these measures are not sufficient in the absence of positive market conditions (Berechman, 2001).

Employment

Positive effects on employment are frequently claimed by project promoters who point to the opportunities to increase the size of the accessible labour market. More robust empirical research is more ambiguous and tends to focus on easily quantifiable outcomes such as office rent values. The employment impact of particular transport initiatives such as the Sheffield Supertram has been identified as both negligible (Lawless, 1999) and significant (Banister and Berechman, 1998). European Commission research has found that strategic projects such as TENs do increase employment (EC, 1998).

The impact of transport infrastructure may also be re-distributive rather than generatative of new employment (Boddy et al, 1999). This may lead to negative social costs, for example removing sources of employment from particular areas (Boarnet et al, 2000). Businesses which require a pool of staff more likely to live in cities, e.g. lower paid workers and students, may be an exception, in choosing to locate centrally (Boddy et al 1999).

Ability to Attract Inward Investment

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Case studies report on a positive effect (Sheffield Supertram: in Llewelyn-Davies, 2002) or a negligible impact (Tyne and Wear Metro: Walmsley and Perret, 1992) on increased business interest at specific locations. At a more generic level, transport alternatively is seen as important (Healey and Baker, 1995), significant only when choosing between individual sites (Scottish Executive, 2002) or negligible (Cervero and Wu, 1998).

An important related question is understanding where the majority of inward investment originates. A Bristol study suggests that 95% of relocation is within the local area, so transport infrastructure is not critical (Boddy et al, 1999).

Table 3.1: Transport Investment and Economic Performance.

This table is available separately as a download in MS Word format from the foot of this page.

3.2.2 Social Cohesion

Social Equity

The relationship between transport poverty and social exclusion is contested, but on balance accepted (Hine and Mitchell, 2001; DETR, 2000; Preston et al, 2000).

What is less clear is the most effective way of tackling social exclusion. Public transport investment may be important given low car ownership amongst deprived groups (Sinclair 2002) particularly if it can direct growth to deprived areas (American Public Transport Association, 1993) or enable the economically deprived to access jobs (Roberts 2000). Other research cautions that transport investment is not sufficient per se for the alleviation of inequities (Llewelyn-Davies, 2002).

Social Connectedness

Social interaction and access to opportunities and facilities contribute to social inclusion as much as income level (MORI, 2001; JRF, 1998).

Some authors advocate transport investment as critical in improving connectedness, but suggest the type of intervention depends on the anatomy of deprivation. For example, where deprivation is concentrated, scheduled bus investment may be beneficial. If deprivation is scattered, demand-responsive transport or virtual delivered services and opportunities may be more effective (Grieco, 2000). Others suggest accessibility is more critical than mobility, proposing a relocation of essential services (CfIT 2001).

Community and social order

Transport investment may support a daily population exodus and undermine viable communities. It may also cause social segregation by supporting urban flight by wealthier residents to the suburbs (Boarne, 2000; Grieco, 1994).

At a micro-level, transport related projects, especially cycling, can be used to re-integrate excluded young people (Elster, 2000).

Table 3.2: Transport Investment and Social Cohesion

This table is available separately as a download in MS Word format from the foot of this page.

3.2.3 Urban Attractiveness

Environmental Quality

The disjunction between social costs and priced transport costs is most frequently used to justify transport investment where ubiquitous accessibility is already largely assured (SACTRA, 1999; Llewelyn-Davies, 2002). Investment is justified to reconfigure transport patterns to reduce the environmental externalities of road-based mobility.

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Many commentators position environmental quality as central to urban regeneration and argue that ex-ante or ex-post appraisal mechanisms should integrate such potential outcomes as benefits (SACTRA, 1999; Banister, 2000; Anas et al, 1997; Llewelyn-Davies, 2002).

Public Space Quality

Research drawing on the examples of Portland, Oregon and France, suggests that the public realm can be improved through LRT systems (Hack, 2002; Urban Task Force, 1999). These improvements can reflect street furniture projects funded within the larger infrastructure project, e.g. lighting, or may result from the alleviation of road externalities such as severance or pollution.

City Liveability, Vitality and Viability

The quality of life a city offers is positioned as important to achieve regeneration, particularly in that it can attract new and mixed-income residents (Simmie, 2001; Gordon and Cheshire, 1998).

Transportation and particularly public transport is positioned as important to quality of life (Donald, 2001) but supportive planning policies are also required. The possibility that transportation will also act as a two-way conduit is also noted (Walmsley and Perret, 1992; ITC, 2002).

City/Area Image

An improved city image may follow transport investment and particularly LRT (Weinstein and Clower, 1999; Lawless, 1999) or high speed rail (Banister, 2000). This positive impact may support regeneration but is rarely reported or measured within standard CoBA appraisal (Weber 1976; Llewelyn-Davies, 2002).

Table 3.3: Transport Investment and Urban Attractiveness

This table is available separately as a download in MS Word format from the foot of this page.

3.2.4 Spatial impact

International/National

International linkages particularly via international airports are cited as one of the critical success factors for growth (European Commission, 2000), location decisions (Charles et al, 1999) and tourism (Llewelyn-Davies, 2002).

Onward transport connections within the region (road and rail) is required to realise the potential of the airport (Core Cities Group, 2002).

City-Region

Efficient functioning and competitiveness of city-regions are seen to depend on dense connections within the commuter hinterland and with other "first tier urban areas" (Core Cities Group, 2002; Gentler, 1996). However in a mature city-region, a major change in connectivity may be necessary to generate significant growth, e.g. of the magnitude of a Channel Tunnel link.

Regional connections may have unexpected effects on a city-region if an uncompetitive area is opened up to competition (Vickerman, 2001; Banister, 2000) or if it causes the disparity between the central and peripheral areas to widen (Vickerman et al 1999).

City

Transport is a critical influence on the origin of cities (Clark, 1957; Alonso, 1964) and on the continuing importance of competitive cities (Begg, 2002; Boarnet et al 2000).

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The on-going importance of transportation investment is debated. For some, it is critical to prevent the externalities of sprawl, which impact on productivity (Surface Transportation Policy Project, 2000). For others it is only one of the influences that now shape cities (Hall and Hass-Klau, 1985).

Local

There may be a localised impact of transport optimisation, e.g. increased office space around transport hubs or retail rental increases around pedestrianised areas (Parsons Brinckerhoff, 2001).

Table 3.4: Transport Investment and Differential Spatial Impact

This table is available separately as a download in MS Word format from the foot of this page.

3.2.5 Modes of Transport and Competitiveness

Air

Research on Schiphol airport (Hakfoort et al, 2001) suggests airports can act as "growth poles" at a regional level. Each job created at the airport is claimed to lead to one job in indirect and one in induced employment.

Air investment is claimed to have impacts on particular business sectors; attracting tourism (Banister, 2000) and industries which depend on close international links such as high level business services and high-tech industries (Boddy et al, 1999).

Heavy rail

Growth can occur where the accessibility of particular locations is enhanced as experienced around the Japanese Shinkansen high speed rail network. When this is connected to high speed road linkages, the effect may be even more acute (Nakamura and Ueda, 1989). Developmental impact has been experienced at some stations, but not at others. Investment tends to encourage the 'good' locations. For example, Shinkansen had an impact at Shin-Yokohama (a Tokyo 'edge-city' in the high-tech Kanagawa growth zone) but not at Gifuhajima (a second-level station served by slower trains in the slower growth zone between Nagoya and Kyoto).

Land value increases can be expected around transit hubs and on this assumption developer contributions can be expected, e.g. Crossrail (CB Hillier Parker, 2002). However, the effect is not automatic. The state of the local economy, the aims of planning policy, land availability and the market value of the abutting area have been found to be highly influential (Cervero, 1994; Banister, 2000).

LRT

The historical role of urban transit as a spur for development of cities is asserted (Newman and Kenworthy, 2000). The dominant view is that further investment is supportive but not sufficient for continuing growth. Existing economic growth, planning policies which support transit oriented development and the marketability of sites are critical (Cervero and Landis, 1996; Hack 2002, Knight and Trygg, 1977).

In the absence of these and particularly in areas outside the CBD (Banister and Berechman, 2000; Cervero & Landis, 1996), transit may have little impact or may simply re-distribute growth. Again, Sands (1993) picks up the differential impact point, with some evidence of development at Lyon-Port-Dieu but less at Le Creusot.

The importance of LRT investment for economic growth compared to roads is contested. Aschauer and Campell (1991) and the Core Cities Group (2002) assert that it is more productive. Data from the Sheffield Supertram suggests it may be less so (Banister and Berechman, 1998).

Roads

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Road based mobility is positioned as critical for economic growth by some commentators (Echenique 2001; Baum and Behnke, 1997). Others suggest that roads can act as a two-way conduit causing disbenefits to existing businesses or regions (SACTRA, 1999; Gould, 1997).

Land values are used as an indicator of benefit but impacts on rental values near major roads are disputed, Zembri-Mary (1996) finding positive impacts and Reitveld and Bruinsma (1998) finding no such evidence.

Bridges

Strong population growth was experienced in the area around the Tagus River bridge (Banister and Berechman, 2000). In other cases (Humber Crossing, Severn), regional economic impacts have been positive, but modest (Cleary and Thomas, 1973; Simon, 1987).

Pedestrian and cycling investment

Liveability and walkability are associated by some commentators particularly pressure groups (FoE, 1992; Living Streets, 2001). Improving walking infrastructure is frequently associated with tackling social exclusion.

Well-designed town centre pedestrianisation may improve retail performance but only for well performing businesses. Weaker businesses may suffer as rental values rise (Robert, 1990; Hall & Hass-Klau, 1985).

Table 3.5: Mode of Transport Investment and Developmental Impact

This table is available separately as a download in MS Word format from the foot of this page.

3.3 An Integrated Package

Having reviewed the role of transport in city competitiveness by a number of themes, it is perhaps worth concluding by considering the need for integration. There is self-evidently a strong need for linkage between transport investment and the emerging urban renaissance and social inclusion policy agenda.

Boddy (2000) encapsulates the issues well:

"It is highly likely that the differences between cities in terms of urban form, the provision of infrastructure and services, the operation of capital markets, the land and property market, the planning system, environmental quality, institutional structures and supports, the education and training system, links between enterprises and between enterprises and other institutions and the extent of external networking and connectivity will all contribute to differences in terms of competitiveness."

In pursuing improved city competitiveness, the policy package will therefore need to be wide-ranging and, critically, well integrated.

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4 Previous Research Methodologies

4.1 An Under-Developed Research Field

From our extensive review, a number of conclusions can be drawn. Competitiveness has been defined as a combination of economic, social and governance elements (for example, in Buck et al, 2002). However, most of the transport and competitiveness research has concentrated on the economic aspects, which in turn focuses attention on the comparative advantages and disadvantages of particular locations, together with their labour forces, skills levels and other advantages. The social dimensions are more concerned about the distributional aspects and the means to reduce differences between those same locations. This is a clear tension between the different elements of competitiveness. The governance aspects provide the balancing act between the economic imperative and social aspects, whilst at the same time ensuring the fairness between all parties so that competition can take place.

The second dilemma is the tension between the economic development effects of transport investments, which have had a substantial amount of research effort devoted to them, and the broader competitiveness effects, which have had little research on the transport dimensions. The five factors identified by Fainstein (2002) in her review of the ESRC Cities Programme, as they related to competitiveness, were:

1. The partnership arrangements involving government, private and non-profit sectors, taking on a variety of forms and including development agreements, regulatory and fiscal incentives, privatisation, and ongoing collaborations in planning and development.

2. Clustering of enterprises in similar or related fields or sharing a common ethnicity.

3. Human capital, represented by an educated labour force and/or by the presence of research facilities and institutions of higher education.

4. Social capital evidenced through business networks, civic associations and other organisations.

5. Infrastructural investment in areas ranging from transportation facilities to information technology.

With respect to cohesion and governance, even less attention has been given to the transport dimensions. They do not seem to have featured in any of the studies, but several seem to have commented on the tensions between the different issues, particularly as they relate to the economic imperatives of competitiveness (again, see Fainstein, 2002). There was some limited reference to access to airports in three of the ESRC studies, and the evidence has come from limited empirical surveys of factors affecting the location decisions of individual firms and the question of inward investment. The availability of good quality transport networks seems to have been assumed in many of these studies, rather than a key input that needs to be systematically included in the analysis. This may be an oversight.

At the city-wide level it can be concluded that transport has little direct impact on competitiveness. And, at the very least, that the other four factors mentioned above, and technology, have a greater impact than the transport network. Consequently, below we explore the evidence on the links between transport and competitiveness in the context of economic development effects. These thoughts certainly reflects the findings of SACTRA (1999), which noted that although direct statistical and case study evidence on the size and nature of the effects of transport cost changes is limited, there are two broad camps in the research literature:

Some authors claim 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.

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Others claim that such effects do occur but on a much smaller scale than has been claimed, and that any contribution to the sustainable rate of economic growth in a mature economy, with well developed transport systems, is likely to be modest.

The findings of SACTRA and our review of the literature lead us to believe that the latter assessment is more likely to be true.

4.2 Previous Research Methods

The dominant theory concerning transport and economic development has been structured around Solow's neo-classical growth model (Solow, 1956) where it is argued that sustained increases in investment impacts on the economic growth rate only temporarily. The rate of capital to growth increases and the marginal product of capital declines, with the economy moving back to a long-term path with output growing at the same rate as the workforce, with a positive factor to reflect improved productivity. There are diminishing returns to capital accumulation. This productivity term is determined outside the model and has resulted in criticism, as productivity gains are seen as one of the main promoters of economic growth.

More recently, the endogenous growth theory approach has been developed to include productivity gains explicitly within the model. In addition, economic growth is seen as incorporating other important factors such as innovation and the investment in human capital. This results in increasing returns to scale as the definition of capital is extended to include innovation and human capital. However taxes may also rise, making it difficult for investment. Innovation may indeed reduce costs, but there needs to be the appropriate mechanism present to invest in innovation (Krugman, 1998). Much of the research in the ESRC Cities Programme relates to this new perspective on growth theory.

With perfect market conditions, provided that an appropriate measure of economic welfare is definable, then a properly specified cost-benefit analysis should capture all the impacts (SACTRA, 1999). However, there remains a key problem: markets are never perfect. Alongside these methodological difficulties, there is considerable interest in the impact of individual projects. With imperfect market conditions and increasing returns to scale, it is argued that there is greater integration and productivity growth, particularly if there are positive feedback effects (SACTRA, 1999). The total productivity argument used by SACTRA argues for all factors of production to be used to measure output (land, labour and capital), and that transport should be viewed both as an investment opportunity (to increase capital) and as the means to obtain a more efficient management and use of the system.

These new approaches are similar to those developed by Banister and Berechman (2000), in that transport is not seen as a necessary condition for economic development, but as one of a range of important supporting conditions. The necessary conditions relate to the economic externalities, investment factors, and political factors, as illustrated in Figure 4.1.

Figure 4.1: Conditions for Economic Development

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(From Banister and Berechman, 2000)

The first and most important condition is the presence of underlying positive economic externalities, such as agglomeration and labour market economies, the availability of a good quality (well trained and highly skilled) labour force, and underlying dynamics in the local economy. This is a fundamental condition, as it is only when these factors are all positive and the local economy is buoyant that new transport investment will, in conjunction with other necessary conditions, have an economic development impact.

Secondly, there are investment factors, which relate to the availability of funds for the investment, the scale of the investment and its location, the network effects (e.g. are there missing links in the network), and the actual timing of the investment. Transport infrastructure investment decisions are not made in isolation, so the nature of the investment, including its "place" in the network, is also one of the necessary conditions that need to be considered. These factors on their own are again not sufficient, and this particular focus has been a limitation of much of the analysis found in the literature, which has tended to examine the spatial factors, in isolation, as the main focus of analysis.

The third set constitutes political factors that are related to the broader policy environment within which transport decisions must be taken. To achieve economic development, complementary decisions and a facilitating environment must be in place; otherwise the impacts may be counterproductive. Included in this group of factors are the sources of finance, the level of investment (local, regional or national), the supporting legal, organisational and institutional policies and processes, and any necessary complementary policy actions (e.g. grants, tax breaks and training programs). Again, on its own, even a favourable political environment will not result in economic growth; this is dependent on the other necessary conditions also being present.

In summary, despite the differences in the basic arguments, there are two underlying approaches. One is based in comparative advantage (and perfect markets) where a transport investment results in a change in output in terms of the movement of people and goods. This is a result of the reduction in

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production cost and it is argued that in well-connected networks this is likely to be small and there are declining returns to scale. The other is based on competitive advantage (and imperfect markets) where investment in transport allows agglomeration economies and firms to concentrate on what they are best at doing, perhaps leading to increasing returns to scale. It is here that new transport links may result in positive externalities and economic development.

4.3 A Methodological Framework

Given the ongoing debate over the role of transport in competitiveness, it will be useful to develop a framework within which different types of analysis can be carried out, focusing on particular types of potential linkages. We show our first thoughts as to the 'family' of modelling approaches in Figure 4.2. The proposed framework should seek to understand the relationships between transport investment, development and competitiveness at all levels.

Figure 4.2: The "Family" of Modelling Approaches

Our initial focus is on the modelling studies that have been carried out.

At the macro level, the issues being investigated relate to the contribution of transport to the national and regional economies. It is here that production function models (Aschauer, 1989a, b and c) and cost function models (Morrison and Schwartz, 1996) have been used with mixed success and considerable debate. More recently, there had been a new generation of Computable General Equilibrium (CGE) models developed to explore the interactions between economic variables and the rest of the economy. If these can be extended to include transport networks, then there is considerable potential to examine impacts, at the regional, national and international scales, on the potential contribution of transport investment to development (Venables and Gasiorek, 1998).

Many studies using Production Function Models have tried to establish the statistical link between aggregate infrastructure investment and growth in GDP. The findings are seemingly staggering, with rates of return of up to 60 per cent. In turn, there has been an extensive debate over the validity of the analysis and the claimed causality in this relationship. Two main criticisms have been raised. The first question is whether the simple relationship between output increase (GDP) and input (rate of investment in infrastructure) is influenced by other factors not included in the analysis. The second is

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the nature of the causality - whether growth leads to additional infrastructure investment, or whether investment leads to growth, or whether there is an interaction effect.

A more sophisticated development in the debate has been the use of time series data for the USA and other countries (Aschauer, 1989a and b; Munnell, 1990). Aschauer tests two hypotheses in trying to demonstrate whether public capital "crowds out" private capital. The first hypothesis argues that higher public investment raises the national rate of capital accumulation above the levels chosen by private sector agents. The second argues that public capital, particularly infrastructure capital (including roads, water, sewers and airports), is likely to bear a complementary relationship with private capital in the private production technologies. His main conclusions are that there is a link between the non-military public capital stock and measures of private sector productivity (Aschauer, 1989c) and that the public sector inputs are complementary (hypothesis 2). He further concludes that the decline in US productivity in the 1970s had been precipitated by declining rates of public capital investment.

The general conclusions reached are that public capital has no impact on economic growth, on private capital and labour productivity, but the magnitude and significance of these effects are not clear. The key issue in any analysis of complex relationships is the unravelling of these linkages, so that it is clear as to what can be concluded as predictable correlations and what is still unconnected or remains as uncertain relationships. Certainly, the results on the production function analysis may overstate the scale of the expected impacts of public infrastructure investment, but the links between public investment in infrastructure and economic growth and private capital productivity are important concerns for analysis (Munnell, 1993).

Cost function models on the other hand investigate the effect of public capital formation on national or state economic growth and productivity. However, whereas the production function model produces marginal product measures (e.g. the marginal productivity of an additional unit of public capital investment), the cost function models produces shadow value parameters that indicate the cost saving for the additional public capital investment. Therefore, to explain growth the cost function models show how the expansion of public infrastructure enables private firms to reduce that average cost by lessening the use of private imports or by increasing their productivity. These cost savings are regarded as returns to public investment (Morrison and Schwartz, 1996).

Most of the cost function studies make an implicit assumption that the cost function represents the behaviour of private firms with respect to their demand and use of inputs, as manifest by their cost minimisation behaviour. The cost function models enable the derivation of several measures of productivity change and economic growth from public infrastructure development (Appelbaum and Berechman, 1991).

The main contribution of these two modelling approaches has been to draw attention to the importance of public infrastructure in promoting economic growth and private capital productivity. Moreover, the analysis also indicates that with respect to the growth effect of public capital expansion, what matters is not the size of investment in the public capital stock but rather the annual per cent increase of the stock. This means that a large investment in public infrastructure is bound to have an insignificant impact on economic growth if it constitutes a negligible addition to the in-place public infrastructures stock. For example, a massive investment in a new transport link may yield insignificant growth effects if this link constitutes but a small proportion of a well-developed network.

Computable General Equilibrium (CGE) models include each sector of the economy in terms of production, consumption and trade. Consumption (by private households and the government) and investment are determined for each good for a given set of prices and income levels. Relationships between import and export prices, and trade volumes determine the level of imports and exports for reach good at any set of domestic prices. Production functions give relationships between input costs and output prices, and between input demand and output quantities. Input costs include capital and labour employment costs, wage rates and returns to capital are determined through factor markets, which may incorporate unemployment. Given these relationships, this CGE model is able to determine the levels of prices and output, consumption and trade and employment that will result

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from an external change (e.g. in technology, consumer preferences or prices). Venables and Gasiorek (1998) examined the welfare implications of transport improvements in the presence of market failure. They concluded that the CGE model approach should be linked to conventional transport models and that this would provide a very promising way in which to look at them regional implications of transport investment on development.

Land use and transport models have a lengthy history and can also be used in this regional level analysis. Changes from a transport investment can be identified in terms of travel time savings and changes in accessibility. The difficulty with this type of approach has often been that new transport investment when viewed solely from a transport perspective seems to encourage additional travel rather than generating additional transport benefits or development benefits more widely. With the current range of land use and transport models, it is difficult to examine the effects of transport investment on development or the regeneration effects in terms of new jobs or the longer term readjustments. There is little analysis carried out overtime and most of the appraisal/evaluation is in the context of studies carried out before investment takes place (David Simmonds Consultancy, 1998).

At the meso level, prioritising objectives and criteria for project appraisal/evaluation constitutes a set of issues that decision makers need to be very clear about. A three-step procedure has been proposed (Banister and Berechman, 2000):

1. The majority of benefits need to be transport related, since otherwise why invest in transport facilities in the first place. Cost benefit analysis should remain the key method for transport appraisal.

2. The need to avoid double counting in measuring non-transport benefits must be clearly recognised, and explicit measures taken to highlight situations where this occurs (see earlier discussion).

3. The need to show functional linkage between primary transport benefits (e.g. accessibility improvements) and potential economic development effects should be demonstrated on a project by project basis.

If transport investment is to take place, a twin approach could be adopted where conventional cost benefit analysis is carried out on the project to determine the user benefits and costs of investment. To achieve a given rate of return, this analysis may account for some or all the necessary returns. If there is a shortfall, then a complementary analysis needs to take place that takes a wider view of the investment proposal. It could be argued that this complementary analysis should become an integral part of all evaluation, not just where the transport analysis fails to meet agreed criteria. It would further develop the current best practice being operated by the Department for Transport in its New Approach to Appraisal (DETR, 1998). For further details see Banister and Berechman (2000) or Annex 2 of this review.

At the micro level, there are the environmental and distributional issues as well as changes in property and land values resulting from transport investment. There seems to be no comprehensive research methodology in this area. A proposed methodology has been developed (ARW and BSP, 2002), and it is currently (2003) being tested in the Croydon Tram corridor in South London. It covers the necessary conditions for measurable additional impacts are identifiable, such as land value increases, and how to measure them. It is the additionality (or latent demand) and measurability of these benefits that need to be analysed.

Figure 4.3 shows what might happen at the local level with new transport investment, with the caveat that contextual conditions also influence the local outcome.

Figure 4.3: The Structural Relationships at the Local Level

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NB. Businesses may be trying to minimise costs whilst maintaining competitiveness and market share - there is a trade off between accessibility, cost of land/rents and costs.

Accessibility levels and changes in these levels: this can best be operationalised through travel time thresholds with the use of distance decay function as the greatest impact is likely to be found closest to the public transport node. Evidence from the literature review has produced a variety of thresholds. For example, Riley (2001) has used 400yds, 800yds and 1000yds, Chestertons (2002) and Hillier Parker (2002) both used a 1km threshold, and studies in Tyne and Wear (200m), Helsinki (500-750m) and Toronto (<500m) are variable. Two other issues are important here. It would seem that the distance thresholds are different for residential and commercial developments, with impact distances being larger for the former than those for the latter. For example, in the Hillier Parker (2002) Crossrail study a 2km radius was considered appropriate in relation to more peripheral stations where residential land use would tend to predominate compared with 1km radii in more central locations with a greater prosperity for employment land uses. Secondly, the impacts may be different on existing developments of all types as compared with new developments.

It should be noted that more than one location (for example in a corridor) might have an accessibility improvement as a result of a transport investment. If accessibility to a location is significantly improved, the labour market catchment area will increase, and the property and land values will also increase in some proportion to that increase in the size of the catchment area.

Property market impacts to cover the non transport impacts - these would include rent levels, land values, ownership patterns and land availability. It is suggested that a series of indicators of change are developed to monitor these factors.

Hedonic valuation - The approach was originally developed in the United States in the 1950s. Since then, hedonic models have often been used to account for the prices of heterogeneous goods. These include, for example, real estate rents and capitalised values for land and buildings. In this context, heterogeneity means that the properties of one good can differ markedly from the properties of another. It is therefore impossible to make a direct comparison of the market prices of such goods. Real estate is not a standardised good, either, because its value is the sum of a variety of construction-related and geographical factors. Construction-related characteristics include, for example, plot size, living area, room size, age and proximity to public transport facilities. Other factors may include the

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location of the commune or district, fiscal arrangements, infrastructure investment and the location of the property itself within that commune or district. On the basis of recent prices that have been paid for property, a proven statistical method (multiple linear regression) is used to calculate the proportion of the total value accounted for by each of a property's individual features.

Hedonic pricing is very demanding on both assumptions and data. Even where the most thorough analysis has been carried out, the results are not clear. Cervero and Duncan (2002) in their study of commuter and light rail impacts examined the impact of four vectors on the estimated price per square foot of individual "parcels" of land. It is interesting to note that they argued that the accessibility benefits were capitalised into land prices and not buildings. The four vectors related to transport (using a measure of proximity of under 400m), the neighbourhood (using measures of mixed land use and the median household income), the location and regional accessibility (using access to jobs), and control (using measures of density and land use to reflect fixed effect variables). The relationships were significant, but only 30% of the variance was explained by these variables.

Regression analysis is a formal technique for quantifying or establishing a relationship between different sets of data. A regression analysis is performed on the information available on property transactions where property price is the dependant variable and the vector of physical and neighbourhood characteristics are independent variables. The results of the regression then provide information on how much change a given property attribute would affect the price of the property.

To complement the above modelling studies, there have been numerous empirical studies, designed to give some quantitative and qualitative evidence on the nature of the links between transport and economic development (for example, see Llewelyn-Davies, 2002; Baum and Kurte, 2001; Aschauer, 1989). These have to be used with care, as they are often based in particular locations and so can help in describing what is going on there, but causal inference is difficult. The recommendation here is that these studies should be used to help build up a picture of change in individual locations, but that for more rigorous analysis they need to be combined with statistical and modelling studies. It is important that clear testable hypotheses are generated. Here we summarise some of the more typical macro empirical study methods:

Trends and extrapolations of existing data, often making strong assumptions on growth rates (e.g. in GDP). These studies have formed an important input to forecasts, and care should be exercised in the interpretation, as there may be circularity in the argument. This has been true in some car ownership forecasts and more recently in the debate over transport intensity of the economy.

Business competitiveness surveys and other kinds of surveys (e.g. location decision surveys) have been central to many of the projects within the ESRC Cities Programme. Care should be exercised in terms on understanding the sampling process (how the firms were selected) and size of sample (often small). Comparisons made over time and location can also cause difficulties with interpretation.

Multiplier analysis has been frequently used in airport expansion analysis to assess the impacts on employment and incomes. Not only does the value of the multiplier vary between studies, but so does the nature of the employment (direct, indirect and induced) and the area over which the impact is to be felt. This may in part be due to the fact that studies often take the weighted average of multipliers used previously.

Productivity gains are also important, as these effects also influence employment (again at airports and other transport facilities). Measures developed here include passengers per direct job, which has increased at airports by about 4-5 per cent a year recently, due to exceptional growth levels in air travel and the switch (until recently) to larger aircraft (Banister and Berechman, 2000). One key argument in the recent debates over the future of airports is that these productivity gains will not continue unless new investment is made in airport capacity (Oxford Economic Forecasting, 2001).

And finally, at the micro level, a number of further types of empirical analysis are available, as outlined below:

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Transactional analysis monitors the changes in property and land values from actual transactions. This type of analysis is very useful, but usually depends on information from the valuation office and the land registry, often at a very localised level. Problems may occur with confidentiality.

Projected rateable values also give a good indicator of property values in both the residential and commercial markets, and a revaluation is currently being undertaken (to be completed in 2005).

Environmental quality audits and a range of other qualitative analyses provide complementary information to help balance the more quantitative economic information and model outputs. Such analysis can include accessibility mapping, proximity analysis (distance to local facilities), and catchment areas for a range of activities (for example employment).

4.4 Conclusions

As we have seen, there are many available methods, but each situation needs to be carefully investigated prior to a particular method or set of methods is selected. This decision depends on the objectives of the analysis, the scale at which it is to take place, and whether time series analysis is required. There also seems to be no clear set of methods explicitly directed at competitiveness and transport. The transport implications seem to be of a secondary order of importance, or to be taken as given rather than a key input variable. This might be changing, as transport congestion is now much higher on the agenda for businesses, as it is affecting their efficiency (Banister, 2002). The main focus of research has been on the macro economic effects of transport investment on the economy as a whole (production function and cost function approaches), the spatial economy (general equilibrium models), the city (land use transport models), and the local economy (micro economic models). At the more local level, there has been less activity, but this is now changing with the increased interest in the property market effects of transport investments. Here there are substantial data problems. The opportunities for statistical analysis, regression and hedonic pricing models provide the best way forward.

In all situations, there is a case for mixing quantitative and qualitative analyses, with the more technical analysis being supplemented by surveys and interviews to help with interpretation and to infer some causality in the relationships. One of the weaknesses in much of the analysis has been the over emphasis on ex ante studies, which have helped in trying to establish whether a transport investment should be made. There is much less weight given to monitoring or ex-post analysis which would help to improve methods and to learn from a comparison between expected and actual outcomes. This means that data should be collected at several points in time so that repeated cross sectional analysis can be carried out, or even some longitudinal analysis where individual firms or households are followed over time.

In terms of the other two dimensions of competitiveness, namely the social and governance issues, there is little research, but both should be given priority. The social aspects are covered in a limited way through the broader based evaluation methods, the impact analyses and some distributional analysis. One particular topic might be the reconciliation of the economic imperative and the social priorities, which might be in an opposite or at least a conflicting direction. With respect to the governance issues and transport, it is again implicit. To maintain and increase competitiveness, it is necessary to have a supportive institutional and organisational environment so that business can operate at its most efficient. But it is difficult to identify specific studies on transport, competitiveness and governance. The way into the area might be through case studies of key transport policy decisions that might affect competitiveness, and to establish the active role of governance in this process (for example, the congestion charging scheme in London or the decision on the London bid for the 2012 Olympics). The role for governance is positive as it provides the building blocks for city competitiveness. Begg (1999) provides an introduction to the potential menu of measures; which includes transport investment; and also training, aimed at increasing the vocational skills required by employers; improving the built environment; and fostering inclusiveness of all social groups.

Although there are many critical influences on competitiveness that are beyond the control of urban policy-makers, this does not mean they need be passive actors. Effective policy can equip cities to

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adapt and to foster a dynamic economic environment. Conversely, ill-judged policies can deter investment and trigger cumulative forces that may lead to the decline of a sort that has been evident throughout many parts of the western world and the UK.

Porter (1998) argues that: "The old distinctions between laissez-faire and intervention are obsolete. Government, first and foremost, should strive to create an environment that supports rising productivity ... government should recognise that social and economic policy must act in concert, rather than in separate boxes."

Similarly, Kresl (1995) states that: "The individual city's government and private sector entities can do a great deal to enhance that city's competitiveness and to enable it to achieve the most desirable future possible."

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Annexes

Annex 1: Acknowledgements

This literature review has been prepared for the DfT and ODPM by Llewelyn-Davies and the Bartlett School of Planning, University College London.

Project Team

Robin Hickman, Professor David Banister, Professor Sir Peter Hall, Martin Crookston, Jane Stamp, Will Teasdale and Eleanor Purser.

Thanks to Stephen Marshall and Tim Pharoah for additional helpful comments on various drafts of the text.

Steering Group

David Edwards, Helen Bullock and Sarah Fielder.

Annex 2: Glossary

A number of terms have been used in the main text, which may not be easily understood by a wider audience. These are explained below:

Economic growth - the continuous process of annual increase in per capita income, factor productivity, national, state or regional product and employment. Employment has traditionally been the most commonly used measure of growth in empirical studies.

Direct effects - those which may be immediately realised in terms of accessibility changes, i.e. ease of access, comfort, safety, travel times and/or travel costs. They include:

Relocation, land rent, urban form - the change in the relative accessibility of locations may affect the location decisions of households and firms, leading to changes in rental values and, ultimately, urban form.

Consumer and producer surplus - for affected residents, benefits may include reduced costs for obtaining goods and services, increased income from selling goods and services to outsiders and/or increased variety of work and recreational opportunities associated with greater locational accessibility. All of these effects can ultimately lead to the growth of business sales and income in the affected geographic area.

Production and transaction cost savings - user benefits may lead to monetary benefits for some individuals and businesses within a given geographical area. For example, for affected businesses, there may be benefits in terms of product cost, quality or availability stemming from changes in labour market access, the cost of obtaining production inputs and/or cost of supplying finished products to customers.

Indirect effects - the investment in infrastructure leads to other non-direct effects, i.e. the broader benefits to businesses and residents of communities and regions.

Multiplier effect - results from the public-work nature of the investment as it generates employment and income in the local area. These benefits last throughout the project's implementation period and they may also translate into longer-term employment at the investment (for example in the case of a new airport), with further impacts on indirect investment related activities and the wider economy (induced employment).

Investment multiplier - the creation of additional income, consumption and employment. There may be other (non-transport) ways of achieving similar multiplier effects, e.g. through the taxation system

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Travel effects - improvements in transport network accessibility, which can lead directly to a change in the spatial distribution of firms and households

Primary benefits - the primary benefits of transport investment result in welfare gains such as reduced travel time and costs.

Externalities - a benefit or cost that is not generally, or fully, reflected in market prices. For example: environmental degradation, congestion and pollution. Pecuniary refers to third party benefits.

Allocative externalities - a reduction in transport costs is likely to affect firms' and individuals' behaviour in other markets, e.g. the allocation of time between leisure and work and use of infrastructure facilities.

Environmental effects - such as noise, air pollution and wider climate effects.

Transport network economies - the addition of a transport link can result in increased traffic flow over the entire network, greater than the additional traffic over the new facility.

Labour market - here relates to individuals' willingness to participate in the labour force: a new transport investment project may introduce new individuals to the workforce.

Agglomeration economies - benefits accrued to firms resulting from their geographical proximity to other firms.

Annex 3: Previous Banister & Berechman Research

Banister and Berechman in Transport Investment and Economic Development (2000) provide some recent thinking in the transport and economic development field. We don't repeat all of this here, but include some of the more important points below.

When prioritising objectives and criteria for project appraisal a three-step procedure has been proposed:

1. The majority of benefits need to be transport related, since otherwise why invest in transport facilities in the first place. Cost benefit analysis should remain the key method for transport evaluation;

2. The need to avoid double counting in measuring non-transport benefits must be clearly recognised, and explicit measures taken to highlight situations where this occurs (see earlier discussion);

3. The need to show functional linkage between primary transport benefits (e.g. accessibility improvements) and potential economic development effects should be demonstrated on a project-by-project basis.

If transport investment is to take place, a twin approach could be adopted where conventional cost benefit analysis is carried out on the project to determine the user benefits and costs of investment. To achieve a given rate of return, this analysis may account for some or all the necessary returns. If there is a shortfall, then a complementary analysis needs to take place that takes a wider view of the investment proposal. It could be argued that this complementary analysis should become an integral part of all evaluation, not just where the transport analysis fails to meet agreed criteria. It would further develop the current best practice being operated by the Department for Transport in its New Approach to Appraisal (DETR, 1998)

As itemised in Figure A3a, this would include the contribution of the project to the transport network as a whole through network analysis (this could be seen as the increase in overall welfare). This is not difficult to carry out, either through existing land use and transport models or through network based general equilibrium models (see above and Oosterhaven and Knaap, 2002). The key issue here is to identify the value added, not just in terms of physical factors (e.g. accessibility and time savings), but also in terms of the role of key actors in taking advantage of the new network integration. Network

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integration is demand led within a market environment. Although the actors can facilitate integration through regulation, price, location and other complementary policies, it is the user of the network that primarily determines the level of integration. The freight sector best illustrates this point through its reorganisation. Value added is demonstrated in the form of the new flexible production processes with outsourcing and decentralisation, together with new management structures. It seems likely that other sectors (e.g. passenger) will adapt in the same way so that the integrated services will respond to the demand of users for high quality "seamless" travel (e.g. in the leisure sector). This is the customer driven network.

Figure A3a: A Conventional View of the Effects of Transport Infrastructure Investment

(From Banister and Berechman, 2000)

Full network integration requires a linking of transport networks, together with economic, cultural and other networks. All of these networks interrelate, and it is difficult to apply one form of evaluation. Even if it was possible to develop a unified evaluation tool for network integration, the product is likely to be technocratic and only able to tackle part of the problem. This is a feature of current methods that mainly address a single mode in the context of a single project, concentrating on only a limited number of impacts (e.g. the physical infrastructure). A multiplicity of approaches and methods should be used, and the analysis should be carried out on the functioning of networks in particular contexts (Banister et al., 1999).

In addition, the value added of the project would be assessed through its contribution to local employment, the potential for increases in productivity, and the environmental impacts. To some extent, these issues have been addressed, but it is here that more sophisticated multiplier analysis could be carried out, in particular exploring the relationships between transport investment, output, productivity, and employment. It is unclear whether benefits from transport investments are capitalised through lower prices, through higher levels of employment, through higher wages, or through increased profits, or through different combinations of these possibilities.

Finally, the evaluation would also investigate the distributional impacts in terms of the spatial effects on the regional and local distribution of services and facilities, and the social impacts. As with all decisions, there are important spatial and social impacts. So the appraisal would need to address the distributional effects in a quantitative and a qualitative framework. Some effects are not difficult to identify in terms of the spatial impacts, as the core areas become more accessible, often at the expense of the peripheral areas, and as the buoyant local economies increase their dominance. Other impacts, particularly those relating to low income groups or "disadvantaged" groups are much less easy to identify. Hence, in much of the regeneration literature, investments are made on the basis that the

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local population (often disadvantaged) will benefit. In reality, it is outsiders that really benefit, and this in turn leads to greater social polarisation (Massey, 1993; Swyngedouw, 1993).

The main output from a transport investment, is network accessibility improvement. Assuming a positive net value of these effects they also represent welfare gains to households and firms. Subsequently, two additional effects may arise. First is the impact of network accessibility improvements on activity location, which if it ensues, may improve spatial patterns and economic efficiency. The second potential result is economic development. This effect is predicated on the presence of certain market conditions, or "allocative externalities". These effects emanate from the non-compensatory action of one economic entity on the utility level of another, which in turn, can affect the efficient allocation of resources in the economy. Traffic congestion is an example of negative allocative externalities, whereas firms' agglomeration represents positive ones.

Transport accessibility improvements can potentially trigger several major positive externalities, which are susceptible to accessibility enhancement. In turn, they can boost productivity, reduce production costs and promote more efficient use of resources. Collectively, these changes can bring about economic development as defined at the outset. And these benefits must be in addition to the primary accessibility improvement benefits and not merely their market capitalisation.

To summarise, the main argument regarding economic development ensuing from transport infrastructure development is that the mechanism that transforms accessibility benefits into economic development benefits is the presence of positive allocative externalities in specific markets, which are amenable to improved accessibility. The scale, spatial and temporal distribution of these externalities will affect the magnitude and scope of economic development, given the transport investment. Noticeable examples are labour market economies; an economy of industrial agglomeration; and transport markets economies. An important example of the latter is when two disjoint networks are linked by a newly constructed facility, thereby opening up for trade previously non-trading markets . Another example is when a new freight terminal enables intermodality (say, between truck and rail), which improves "just in time production", thereby reducing inventory costs to producers.

Figure A3b: The Evaluation of Economic Growth Benefits from a Transport Infrastructure Investment

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(From Banister and Berechman, 2000)

Annex 4: Literature Review Method

Economic Performance

Economic Growth Research indicating an increase in economic activity directly or through a proxy measurement particularly commercial rents as a result of general transport investment. Particular types of transport investment are presented within the mode of investment section.

Agglomeration Research which supports or refutes the importance of agglomeration of particular activities (in the sense of cities) for competitiveness and which examines the impact of transport policy/investment on location/distribution of business activities

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Productivity Research indicating an impact on the cost of production inputs relative to the value of outputs as a result of transport investment or policy decisions.

Ability to attract inward investment Research which shows that transport infrastructure influences investment decisions at a regional or city level

Employment Research indicating the impact of transport on employment levels or patterns

Social Cohesion

Social equity Research illustrating the impact of transport on economic inequities particularly through supporting re-integration into the employment market and on social exclusion in general

Social connectedness Research illustrating the impact of transport on the ability of people to sustain social relationships or access services other than employment

Community and social order Research which shows how transport investment supports cohesive communities and prevents anti-social behaviour

Spatial Impact

International Research which shows that international transport linkages are critical to international competitiveness

Region Research which shows that the city-region is a relevant unit at which to pursue competitiveness and that regionally interconnected transport infrastructure is a key component in the efficient functioning of this unit

City/Local Research which suggests that the general spatial form of cities has been impacted by transport infrastructure. Not research which examines the agglomeration effect

Mode of Investment

Air Research which looks at the type of economic effects of air links. Not research which looks at the value of international links or the contribution to inward investment which are explored elsewhere.

Heavy rail Research which investigates the impact of heavy, strategic rail services in particular

LRT Research which investigates the impact of urban rail services including metro and tram services in particular

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Roads/bridges Research which investigates the impact of road and bridges in particular

Pedestrian/Cycle Research which investigates the impact of pedestrian and cycle provision in particular

Annex 5: References

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