A road is much more than a strip of asphalt. Expressed by Adam Smith in 1776, roads facilitate “distant sale”. They enable mass production by permitting smaller towns with larger factories to sell elsewhere what they make. The result is a regional specialization that lets each section of a country do what it best does.
Now, almost 250 years later, still, roads are crucial for economic growth.
Road Safety
While the IMF found a correlation between income and speedy roads, they pointed out that a slow road does not necessarily show the absence of connectivity. It is entirely possible that the area also has other forms of transportation. However, we do find a pattern:
The Economist tells us that there are three phases of road evolution. First you have a poor, slow road. Next, it gets paved and the number of traffic deaths rise. Then after, countries elevate road safety.
Perhaps corresponding to the stages of road development, middle income countries suffer the most deaths. But, when development ascends, traffic deaths fall as they have in China and South Africa. We should note that the World Bank classifies a country as lower middle income if its GNI per capita is $1,036-$4,045 and as upper middle income with $4,046-$12,535 GNI per capita:
Below, you can see further correlation between less road safety and middle income countries:
Our Bottom Line: Economic Growth
A 2018 World Bank study connects economic growth to traffic fatalities. Looking at five middle income countries (China, Thailand, Philippines, Tanzania, India), they attribute 7-22% lower per capita GDP growth to the absence of road safety. They also cite the welfare benefits that would be realized.
Adding a hopeful note, the report says that Australia reduced its road fatality rate from 30 per 100,000 to 5 per 100,000 after safety interventions that included “prohibition of drink-driving, imposition of speed limits, and the introduction of road and safety devices.”
My sources and more: Thanks to my IMF blog email for alerting me to road quality. Then, for the downside, The Economist, here and here, and WHO had the facts. In addition, these papers, here and here, had more analysis. Then finally, in a past econlife, we looked at the middle income trap.
