Do New Highways Attract Businesses?: Case Study for North Country, New York

A frequently heard argument for new highways, especially those to be located in rural regions, is that they will directly lead to new business attraction and expansion opportunities (i.e., expanding from a two-lane road to a four-lane expressway will be what is needed to jump-start lagging economic regions). The literature on industrial site location commonly cites transportation infrastructure and access to markets as key determinants of business location. Meanwhile, many prospective studies are undertaken (major investments studies, environmental impact statements, etc.) that include analyses to try to estimate the economic impacts of new highway investments. The problem is that most transportation-based analysis tools, such as travel network and user benefit models, are not designed to answer the question of the potential for a highway investment to lead to business attraction (which is inherently speculative). Rather, they focus on quantifying current and future traffic patterns and how they will be affected by a highway improvement. The North Country Transportation Study examined these traditional benefits but also, perhaps more importantly, carefully studied the potential for business attraction to the region. This effort provides a substantial advance in the economic development analysis of transportation investments because of the thoroughness of sources and methodologies undertaken to understand and quantify this impact in the relatively rural and isolated region of northern New York. Local interviews and surveys, state business attraction and retention trend analysis, and a specially designed business attraction model were used to transform a typically speculative concept into a tangible one.