Can the economic impacts of infrastructure projects be predicted? : economic development projects in the Appalachin Mountain Region

Abstract

I carried out a study of infrastructure projects in support of local economic development in a number of counties in the Appalachian Region of the United States in order to identify factors that influence the outcomes of such projects. Such information would help funding agencies decide how best to allocate their funding from the point of view of maximizing the economic impacts of the projects they fund. I compared 52 projects in terms of project type, economic impacts and efficiency of public funding, selected characteristics expected to be associated with successful projects, and population and employment growth in project areas. For the purposes of this analysis, I defined successful projects to be those with high job creation and retention impacts within each of three "scale groups" composed of projects with similar public-funding levels. I compared projects in terms of their scale groups, within each scale group in terms of their job impacts, and overall in terms of job impacts. The results indicate that water/sewer projects may tend to have higher job impacts than access-road projects, that projects that target high economic development potential areas and that remove bottlenecks to growth may tend to be successful, and that successful projects often take place in areas with positive rates of population and employment growth. The results also show significant differences in the efficiency of public spending between high- and low-success projects. This emphasizes the need for further efforts at identifying factors associated with project success.