| Traditional impact assessments of transport infrastructure projects are constrained by assumptions of mainstream economic theory (such as perfect competition), whereby analyses are restricted to estimating short-term growth effects. When transport investments are made in relatively infrastructure-poor newly industrializing countries, the consequences extend beyond growth effects, to some transformational changes. The sharply reduced travel costs and time offered by transport projects provide new economic opportunities and set in motion dynamic behavioral relationships among households and production units. The variety of economic changes induced in this process by transport infrastructure is developmental in the sense of structural and spatial transformation of the economy, as captured by the New Economic Geography Theory. This dissertation examines the underlying processes of development induced by transport infrastructure in a developing country. Specifically, it introduces the notion of induced development, describes underlying processes within a theoretical framework, and empirically estimates the magnitude of such effects for a major highway improvement project in Sri Lanka.; The empirical study uses a series of disaggregate models to capture various effects of induced development. From a macro perspective, quasi experimental method and multivariate analysis indicates a shift away from a predominantly agriculture based economy towards a one that is more specialized and industrialized. Production function analysis re-validates this shift, where causality is observed between the transport project and growth in industrial output. Household income analysis ascertains a positive link between income and the road and it observes a change in households' approach to earning income---a shift from land and labor intensive occupations towards more skilled employment. Demand function analysis observes a change in household demand, where consumption characteristics of households near highway are substantially different from than those located further away.; The value of this research lies in the insights it provides into the processes of transport infrastructure-induced development, and the empirical estimation of the direction and magnitude of some of the consequent effects. The research results and guidelines for future research are intended as a contribution to the knowledgebase for development of a comprehensive model of transport infrastructure induced development. |
