Monday, March 18, 2013

Highway to heaven? – Regional effects of the Hungarian M6 motorway

Highway to heaven? – Regional effects of the Hungarian M6 motorway

by Pass Dániel

On 31st March 2010, M6, the newest motorway of Hungary was opened to the traffic by the prime minister. It was more than two and a half year ago, so we can answer the question whether it has been a good investment? Or was it a mistake to waste a lot of money to this enourmos project?

The M6 motorway is a north-south motorway in Hungary connecting the capital Budapest with Pécs. Its first 58 km part between Érd and Dunaújváros was opened to the public in 2006 and the building of following parts (Dunaújváros-Szekszárd, Szekszárd-Bóly) was finished in 2010. The direct connection between the M6 motorway and Pécs is provided by the M60 between Bóly and the seat of county Baranya.

In an economic perspective, the construction of such a long motorway like M6 (193 km) always means a huge decrease in the transaction costs beacause of the faster and safer road network. As follows, it would have to connect more little towns into the inland and maybe to into the foreign trade, too.

Thanks to the highway development, the length of the travel between Pécs and the capital reduces with one hour. It’s very significant if we pay respect to the fact that the two cities are approximately 200 km from each other. This is related to the other bigger cities along the M6 motorway like (in order, from north to south) Dunaújváros, Paks, Szekszárd, Mohács, Bóly.

But have these cities really realized profit from the closeness of the M6 motorway as it was opened? Can we see a significant development in the economical position of the towns and cities located in the area of the motorway?

After two years, the economist in county Baranya are disaapointed about the results. According to them, only several cities could gain by the M6 motorway, the most of settlements could not profit on it.

The wine region of Villány has won from the investment. Wine regions and tourism are highle interconnected, so if Villány can be reached faster than more people will go there. And this is what we can see. The same has happened in Harkány which is famous for its thermal spa – the turnover has increased by 15%.

The biggest winner of the new M6 motorway has been definitely Bóly. The industry park of the town is 55 hectare large and still growing. It provides 800 workplace to the citizens. The unemployment rate in Bóly has been 6.9% in this year which is far the best in the region.

After the empirics, we should make an inquiry to the causes.

First, we cannot disregard the fact that there is a crisis and an economic downturn in Hungary. The general investment mood and the activity of investors are not impressive – the hungarian economy has not been growing for three years. On the other hand, the region’s leader town, Bóly could have shown an improve in spite of the crisis.

Second, the construction of the new motorway was rather political than professional decision. Pécs won the title Capital of Europe 2010 and had a successful lobby to win this project, although according to specialists the M7 motorway is very close to M6 and that is why the latter does not have any added value to the inland road network.

Third, M6 connects Budapest only with Pécs, and does not have a connection to the neighbour countries. The original plan was to continuing the construction of the M6 motorway to the CroatiAn border and connect with the Croatian A5 motorway , but this is not in the development strategy of the next years.

Fourth, the effect of the motorway could be also reversed. According to regional statistics, we can establish that in the last two years more people from the region have applied a job in a wealthier region, in the capital or abroad. They have exploited the lower transaction costs to choose a better alternative and probably earn more money. That is a totally rational decision of that people and it is socially positive.

To sum up, we can say that the successfulness of the M6 highway is unassured. There are many positive effects of the project, but it is not very impressive in view of the volume of the investment. We should hope that the picture will be better in long run.


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