The economic effects of passenger transport infrastructure investments in lagging regions. Would the increase in commuting be beneficial for regional development?

Abstract

The economic development of lagging regions faces many challenges. Since these regions typically lack the foundations of successful development policies, studies often report mixed findings on the effectiveness of different traditional policy instruments (such as infrastructure development, subsidies, innovation). In this study, the authors investigate a less frequently examined aspect of the effects of transport infrastructure development: labor mobility. To account for the economic effects of both migration and commuting the authors extend the GMR-Hungary impact model by a regression-based commuting equation. By comparing different alternative simulations, the authors examine the economic effects of changes in commuting due to different reductions in traveling time between a developed and a lagging region in Hungary. Results suggest that promoting commuting can be a source of local development if commuting replaces migration however regional convergence has a negative effect on national growth.