Industrial Diversity,Economic Development,and Highway Investment in Louisiana

Studies examining the link between transportation investment and economic development typically measure development by job and income gains or productivity growth. For some economies, however, stabilization or diversification of the existing economic base is a desired outcome that needs to be attained even as traditional development goals are targeted. This is particularly the case for the rural and persistently poor economies of the Mississippi River Delta region of the United States. Small populations and remoteness are especially acute, constraining the number and kind of employers who will locate or expand in these markets, limiting the job opportunities for residents, and perpetuating the out-migration of younger and better-educated workers. Using information from the Economic Development Highways Initiative that was directed by Congress and administered by the Federal Highway Administration, this study analyzes the linkage between highway investment and economic diversification in Louisiana to evaluate whether this type of investment can play a role in stabilizing these weak and deteriorating economies. Using two-digit employment data, a summary index of industrial diversity is calculated for each parish (county) in Louisiana for the period 1977 to 1997. This diversity index is then correlated with the type of road present in the parish-Interstate, divided highway, and major thoroughfare. Results indicate that highway quality is associated with industrial diversification, even controlling for the size of the economy.