Sunday, April 08, 2007

The Future of the Interstate Highway System

Although the Interstate at 47,000 miles represents only 1 percent of total system mileage, it carries 24 percent of all traffic and 41 percent of combination-vehicle truck traffic. It is a strategic system of arterials which performs well. But it has meant far more to our economy and way of life than its designers could have imagined.

The Interstate Highway System was a technological breakthrough which increased productivity and transformed the country in ways not anticipated. A safer, 65 mile-per-hour system was overlaid onto a less safe, less well-maintained 20 to 40 miles per hour system which previously existed in urban and rural areas. National, multi-state, regional, and local economies were all empowered to reorganize to take advantage of new capabilities. The quantum change it brought about has been compared with the railroads of the 19th Century which also more than doubled speeds and capacities of connections between places, and the jet aviation system of the 20th Century which tied together the nation and the world for business and leisure travel.

Regions that were not part of the nation’s economy became integrated through new opportunities to have longer distance links to goods movement and for personal travel. Look what has happened to the south and west over the past 50 years. Urban areas were able to expand and grow, enabling more agglomerations of industries and skills with much larger urban boundaries. Metropolitan areas now generate over 80 percent of jobs, growth, and development.

The Interstate Highway System has made significant contributions to U.S. productivity growth. During the 1950s, the contribution of highway network investments to annual productivity growth was 31 percent. It averaged 25 percent in the 1960s, and by the 1980s the net social rate of return on highway capital was 10 percent, about equal to rates of return on private capital.

The Interstate System enabled the U.S. economy in the last half of the 20th century to develop within a much larger envelope of potential size and productivity. However, as the capacity and the performance of the current Interstate Highway System are used up, this will reduce the Interstate’s ability to support the increased productivity the United States will need to compete in the global economy.

Greater supply chain productivity and lower logistics costs have been critical to U.S. economic growth. From 1980 to 2003, the cost of transportation was cut in half because of infrastructure improvements making U.S. goods globally competitive.

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