Executive Summary

Transportation investment consists of purchases of transportation fixed assets with a service life of more than one year and changes in inventories. Transportation fixed assets include transportation infrastructure, rolling stocks, and other equipment that are used in the provision of transportation services. Transportation investment, by implementing new technology, establishing continuity of routes and eliminating bottlenecks, and by improving the coverage and accessibility of the transportation network, helps augment the capacity and improve the efficiency of the transportation industry. Hence, statistics on transportation investment indicate the potential capacity and efficiency of transportation in future years. Transportation investment utilizes current economic resources. Transportation investment data show the quantity of economic resources allocated to transportation capital. Transportation investment data are also of great value to government for planning and budgeting purposes, to policy makers trying to understand the impacts of investment decisions, and to researchers interested in investigating the relationship between transportation investment and economic development or conducting other research in this area.

This report provides statistics on capital investment by sector (government, private business, and households), asset type (infrastructure, rolling stock, and other equipment used by transportation industries), and by mode of transportation (air, highway, water, mass transit, railroad, and pipelines). The investment dataset represents transportation investment before deducting depreciation of the existing capital; and this data is presented as a percentage of GDP, and wherever useful, as a percentage of total gross fixed capital formation. The report also provides a review of the literature that examines the linkage between transportation investment and economic performance, a survey of similar statistical works undertaken by other U.S. government agencies and agencies of foreign countries, a discussion of data sources and procedures used to develop the dataset, and a descriptive analysis of transportation investment in relation to GDP. The descriptive analysis is not intended to determine a causal relationship between transportation investment and economic development, which is beyond the scope of this report.

The following findings resulted from the descriptive analysis of transportation investment in relation to GDP:

• First, for the period running from 1987 to 2003, overall transportation investment (including household purchase of rolling stock) on average accounted for more than 6% of GDP. Of this overall transportation investment, investment in rolling stock accounted for an average of 80.5%, and that in transportation infrastructure and other transportation equipment averaged 14.7% and 4.8%, respectively.
• Second, while households are the primary purchasers of rolling stock, government is the dominant investor in transportation infrastructure with the exception of railroads and pipelines modes in which the business sector appears to be the major investor.
• Third, investment in highway infrastructure accounted for the largest share of the total transportation infrastructure investment (64%), followed by air (12.5%), and transit (7.5%) during 1987-2003.
• Fourth, investment in highway, water, and railroad infrastructure as a share of total infrastructure investment exhibited declining trends, while that for air, transit and pipeline increased between 1987 and 2003.
• Fifth, while overall transportation investment (of which 80.5% is in rolling stock) closely echoed the business cycle, investment in transportation infrastructure evidently lagged behind the business cycle. During 2001-2003, in particular, transportation infrastructure investment was declining, while GDP growth had already reached its lowest point in 2001 and begun recovering in 2002.
• Sixth, business sectors transportation investment has been more sensitive to the business cycle compared with its non-transportation investment.
• Finally, transportation investment made by non-transportation industries has been consistently greater than that of transportation industries.However, the intensity of use of transportation capital, particularly rolling stock, is much higher for transportation industries than for non-transportation industries.¹

¹ Intensity of use of transportation capital is measured as the ratio of investment in transportation capital to value added (GDP) from transportation. GDP from transportation services is higher in the transportation industries relative to investment in transportation capital than it is for in-house transportation services in the non-transportation industries. This drives the above conclusion.