2. Answers Emerging from the Literature Review (Page 4 of 4)

2.5 Nature of Productivity Effects

2.5.1 Classification of Literature Findings

A summary classification of literature findings related to the nature of productivity effects is given in Table 4.

Table 4: Classification of Literature Findings Related to Question D: "What is the Nature of Productivity Effects?"

	Direct Investigations	Indirect Investigations
Number of Citations	* 3 [9], [44], [81]	6 [4], [7], [10], [33], [43], [79]
Percent of Total Citations	3	6
Range of Quantitative Findings and Nature of Qualitative Findings	Direct Gains Reserved-capacity strategies for trucks for a particular highway stretch would offer a saving of about 2.5 minutes per truck trip. This translates into nearly $10 million in annual travel time savings for the trucking industry. Logistics Restructuring It is estimated that the benefits from logistics restructuring are 26.5, 3.57 and 1.34 million for Medical Instruments, Telecommunication Equipment and Automotive parts, respectively, for 1994. Spillover Effects Using data for California counties from 1969 through 1988, Boarnet (1988) shows that when input factors are mobile, public infrastructure investment in one location can draw production away from other locations, i.e., negative spillover effect exists.	Direct Gains Some case studies illustrate the nature of the direct productivity gains from infrastructure improvements: stockless purchasing, facilitating labor access, etc. Logistics Restructuring A study of I-5 Interstate corridor estimated that with a 20 percent improvements in travel time and travel time reliability at least six percent of the firms would restructure their logistics and distribution process. The logistics restructuring benefits from such a highway improvements for the region along the I-5 corridor are estimated to be between $585 million and $1,046 million in 1997 prices over the next 30 years. Network Effects Protagonists view: firms exploit external network economies in achieving productivity growth. Antagonists view: effects counted as positive network externalities are normal consumer's or producer's surplus.

* Numbers in square brackets give citation number in Appendix 1.

2.5.2 Review of Literature Findings

2.5.2.1 Direct Savings

Changes in transportation system may affect the system attributes of travel time and travel time reliability. This would enable freight and other private firms to realize short-term cost savings due to lower operating costs. For example, it is estimated[1] that reserved-capacity strategies for trucks, on a particular road stretch, would offer a saving of about 2.5 minutes per average truck trip. This leads to nearly $10 million in annual travel time savings for the trucking industry and almost $30 million in annual time savings for single occupancy vehicles. Transportation system improvements could, by some estimates[2], generate savings of up to fifty percent in distribution cost for some industries. Several case studies[3] demonstrated the nature and extent of the direct productivity improvements stemming from infrastructure investment.

2.5.2.2 Logistics Restructuring Productivity Gains

An improved transportation system will reduce the travel time and increase travel time reliability. This may induce some firms to restructure their logistics operations (transportation, warehousing, and inventories) when they identify an opportunity to reduce the cost of operations, or to facilitate the expansion of business activities. It is estimated[4], for example, that the benefits from industry restructuring alone for 1994 were $26.5, $3.47 and $1.34 million for Medical and Surgical Instruments, Telecommunication Equipment, and Automotive Parts, respectively. Though these numbers seem small, the logistic restructuring benefits are (1) additive to and (2) of great significance relative to the direct conventional benefits.

2.5.2.3 Network Effects

At micro-level, some studies[5] measure how firms exploit economies of density and scope in achieving productivity growth and maximizing profit. These studies investigate potential significance of external network economies and their policy implications for pricing policies that seek to internalize negative congestion, environmental and other externalities. There are opponents, however, such as Rothengatter (1994) who argues that most of the effects counted as positive externalities—such as improvements in economic efficiency or development of new consumption/production structures—are not external benefits but are part of the normal consumer's or producer's surplus.

2.6 Annotated Bibliography

One of the objectives of this study is to provide annotated bibliography of the pertinent research efforts informing decision makers of the nature and magnitude of public policy influence on freight productivity. An annotated bibliography format is developed for this purpose. This format is shown in Figure 1. It is designed to provide all the necessary bibliographical information, to present the public policies, investigated in a specific study, and the resulting productivity gains. Key words are also provided to allow a computer database to be developed at the last stage of this study.

Figure 1: Annotated Bibliography Format
Title (Year)

1	Author(s)
2	Title
3	Book/Journal Title
4	Type
5	Publisher
6	Date of Publication
7	Status of Study
8	Key Words
9	Policy Examined
10	Summary of Results (Key Findings)

2.6.1 Aims of the Annotated Bibliography Format

• To provide necessary bibliographical information;
• To present examined public policies;
• To summarize the key findings related to productivity;
• To provide the key words needed for development of a computer database .

2.6.2 Description of the Annotated Bibliography Format

The top line provides the title of the study and the year of its publication.

• Line 1 gives the name of the author(s).
• Line 2 provides the title of the study if it is a chapter in a book or a journal article.
• Line 3 may give either (1) the title of the study itself, or (2) the title of the book/journal
  if the study is a book chapter/journal article.
• The type of the study (book, book chapter, journal article, report, discussion paper,
  etc.) is given in line 4.
• The publisher and the date of publication are provided in lines 5 and 6, respectively.
• The status of the study (published and refereed; published, not refereed; unpublished)
  can be obtained from line 7.
• The key words, related to different aspect of the functional classification, are
  summarized in line 8.
• Line 9 gives the main public policies, affecting productivity, examined in the
  respective study. They can be related to the summary of results and key findings
  presented in line 10.

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