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3. Conclusion

This paper provides an annotated bibliography and an analysis of the pertinent research findings investigating public policy impacts on productivity. The prevailing view, emerging from the surveyed literature, is that public capital has a weak positive effect on freight and private economic productivity and output.

Below are the main findings from the pertinent literature exploring the nature and magnitude of public policy influence on productivity:

  • Highway investments between 1950 and 1973 had a significant positive impact on trucking and economy-wide productivity.
  • After 1970 the benefits of additional highway investment declined and were close to normal.
  • The decline in both public and private investment has contributed to the slowdown in productivity.
  • Changes in highway network investment lead to larger changes in productivity growth in vehicle intensive industries.
  • An increase in highway capital leads to a reduction in demand for labor and materials and an increase in demand for private capital.
  • Effective transportation network delivers benefits beyond and above the direct benefits from improved transportation. These indirect benefits stem from logistics restructuring or external network economies.

The exact nature of the linkage between public policy and productivity is, however, beginning to be understood. This is especially true for the nature of the specific relationship between highway investments and freight productivity. It is instructive that only 6 out of 102 studies, included in the annotated bibliography, directly investigate this relationship, while another 49 studies examine the public infrastructure contribution to industry productivity. The rest of the annotated studies explore impacts of various public policies on productivity.

Many questions concerning public policy impacts on productivity, competitiveness and economic vitality remain to be clarified methodologically and answered quantitatively. Industry logistics restructuring and network effects are the subjects the least investigated.

It can be concluded that our knowledge of the relationship between public capital and productivity is not sufficient to state the exact impact of public-sector investments on freight productivity. This makes further study of the relationship between public investment and productivity even more needed to develop public policies that will make the most contribution to freight and industry productivity and economic growth.

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