For the Greater Good?—A Critical Reflection on Assessing Indirect Economic Effects Caused by Large Transport Projects

Abstract

Investing in large transport projects affects the (potential) economic development of metropolitan areas. Yet, very little critical research has been performed to understand how to assess these effects. The relationship between infrastructure investments and regional economic development is complex and indirect, and many theoretical and methodological difficulties remain. On the one hand, the assumption that investing in infrastructure is important to sustain economic growth is sometimes doubted. On the other hand, it is argued that investments in infrastructure enhance the accessibility of urban regions and that in the slipstream of such investments, social problems in urban regions can be tackled as well. Despite these contrasting views, there is at least a consensus that transport infrastructure development depends on economic development and vice versa. Yet, in many cases, the method of assessing economic impacts highly affects the results. Therefore, this paper focuses on a critical reflection of methods for estimating economic effects of infrastructure investments. A critical evaluation is made based on Indonesian and Japanese cases. After conducting in-depth desk research on both cases, we found that the broader effects on affected group of people tend to be overlooked due to the problems of time and space dimensions, the chain reaction of effects, and inappropriate data practices. The assessment on the appraisal processes tends to overlook the broader economic implication due to narrow focus and the concept of efficiency of economic theory.