The impact of transportation infrastructure on Latin American development

Since Latin America is one of the regions with the highest urbanization rates in the world (about 80%), it is essential to identify which strategies are most effective in reducing the costs of congestion and improving accessibility, as well as how this may substantially improve the general public’s quality of life and productivity. 

Successful initiatives in this area include the establishment of roads exclusively for vehicles with more than one passenger, transport cost subsidies, the implementation of rapid transit systems, bicycle usage incentives and the extension and improvement of street, avenue, highway, road, railway and underground networks.

When it comes to public transport improvement programs, Latin America can showcase a number of initiatives. Rapid bus transit systems such as the Transmilenio in Bogotá, the Metrobus in Mexico City, the Metrobus-Q in Quito and the Transmilenio in Santiago have all achieved a general reduction in traffic congestion, travel time and pollution.

As for long-distance transport infrastructure, available evidence suggests that its creation, improvement or expansion has resulted mainly in decreasing transportation costs for people and goods. This is because it increases productivity, trade, entrepreneurship and economic diversification incentives, facilitating regional and interregional exchange and increasing the value of areas by aiding in their growth.

There are also cases regarding the subsidy of transport costs in the region. An example is the Transport Subsidy in Brazil (Vale Transporte), where formal employers give their workers a sum of money intended to subsidize travel costs between their place of residence and the workplace, although evaluations of its effects have not been found.

There is also evidence on the impact deriving from the construction of railways, ports and other infrastructure networks. For example: in colonial India, access to the railway network facilitated trade, reduced transportation costs and increased per capita income of the places that were connected by 16%. The development of this infrastructure also had extensive effects on the level of economic activity in colonial Ghana. And in the United States, the development of a railway network at the end of the 19th century increased the land value of the areas connected to the network.

On the other hand, restrictions on the movement of vehicles in the region has generally been harmful and unsustainable over time, and the most common measures such as a “congestion tax” have not been implemented.

Despite the fact that some of these policies have already been implemented in Latin America, such as bringing transport systems to vulnerable areas (the Metrocable for example) or introducing shared bicycle usage, their effects are still unknown. One challenge in terms of knowledge relates to the impact of new technology platforms associated with transport, such as Google Maps or Uber, on city growth and formation.