New Highways as Economic Development Tools:

Stimulating economic growth and development in rural and economically lagging regions is the goal of several federal and state highway programs. This paper examines the effectiveness of highway investment as an economic development tool. A quasi-experimental matching method is used to examine the effects of interstate highways on counties which obtained links during the period 1963-75 or are in close proximity to these newly linked counties. The results show that the beneficiaries of the interstate links in terms of economic growth are interstate counties in close proximity to large cities or having some degree of prior urbanization, such as a city with more than 25,000 residents. Rural interstate and off-interstate counties exhibit few positive effects. Acknowledgment: This research was conducted under Grant SES-87-13817 from the National Science Foundation. Paul Beaumont, David Greenstreet, William Milne, and David Sorenson made valuable contributions to the development of the methods, and Brian Cushing, Virgil Norton, John Quigley, and an anonymous referee provided helpful comments on the paper. http://www.equotient.net Published in Regional Science and Urban Economics (1994) 24, 6: 723-751.