The latest report released by IMF in May 2022 has once again put the relationship between faster roads and the economic growth of a country at the forefront. This correlation, time and again, has motivated many economists around the world to assess the state of a country’s economic health primarily through the prism of its road infrastructure.
According to the report, richer economies worldwide have faster roads, thereby indirectly signaling their importance in ascertaining overall economic growth. It highlighted that high-speed roads tend to carry goods to customers in the far-off markets more regularly. That in turn raises productivity and contributes to sustainable as well as more inclusive economic development.
IMF validated their mean speed report against GDP per capita, road density, the QRI (Quality Road Infrastructure) and RAI (Road Access Index). However, we at Meradesh, decided to keep perceived correlation between faster roads and GDP per capita at the focal point. We collated our data on mean speeds and GDP per capita of countries into a visualization graph to ascertain whether they overlap or correlate.
As can be seen in the graph, the world’s fastest roads are found more in richer economies. And on the other hand, the poorest countries have the slowest roads.
Similarly, countries with the fastest roads have more per capita GDP in comparison to the countries with slower ones as seen in the chart below with top countries with faster roads.
|Country Name||Mean Speed (km/h)||
GDP Per Capital (Dollars)
As per the table, faster and quality roads contribute to higher GDP per capita, which in turn allows for investments in road network extension and quality and further substantiates the correlation between them.
Although there are some exceptions, they mostly are due to the way per capita GDP is calculated globally. It is a country’s economic output per citizen and is calculated by dividing the GDP of a country by its population. As a result, some countries with smaller populations can have higher per capita GDP as wealth is spread among fewer people. However, apart from a few outliers, our data visualization charts corroborate the IMF’s report and accentuate that faster road lead to economic growth.
So, how much do high-speed roads correlate to economic growth?
Super-highways are built to improve the economic productivity and mobility of those living along roads, facilitating regional trade and economic development. It is a prerequisite for transporting goods to nearby places or across borders for reducing time travel and costs. The efficient movement of people and goods ensures accessibility to a wide range of commercial and social activities. In addition to that, it also affects other factors such as tourism, influx of foreign investments, and overall regional development.
Case in study- Slovakia
Since it acceded to the European Union in 2004, Slovakia has built a robust car assembly industry almost from scratch and has developed a consumer electronics industry as well. To have proper functioning of these factories, it was essential to have a proper motorway system for the timely delivery of components, engines and related parts. Slovakia started to invest heavily in its infrastructure, especially towards the expansion of its highway roads to improve its ferrying system. This resulted in ensuring timely supplies, an increase in wages and helped Slovakia in establishing itself as the leading car producer per capita in world. It also provided well-connected areas with higher-quality opportunities for employment, healthcare and education. There have also been other benefits, although on a smaller scale: a decrease in unemployment rates, positive net migration, and an increase in the number of companies. It is home to world-class automobile companies like Volkswagen, Kia, Jaguar Land Rover etc.
All in all, the development of transport facilities like super-highways plays a significant role in connecting supply chains and efficiently moving goods and services across borders. However, there are other socio-economic factors like employment, healthcare and education as well that contribute to the development. And it is important to ensure that road development projects are economically viable, socially acceptable and environmentally sound. Therefore, policies focused on road infrastructure development should be implemented in tandem with other socio-economic and urban growth policies for sustainable economic growth.