I believe Europe can fly – The SESAR program

I believe Europe can fly – The SESAR program

By Eszter Szücs

At the time when we in Hungary still cry about the collapse of our airline, the Malév, in the EU there is an ambitious new project about the union of the EU countries’ skies. This project is called SESAR, and it is developped to be the European air traffic control infrastructure modernisation programme. With the success of this programme, the EU will have a new generation of air management system which will correct the actual system’s problems.

There are three phases of the SESAR project, as we can see in the picture below.

The first part is the definition phase - it lasted from 2004-2008. It was an ATM (Air Traffic Management) master plan defining the content of the future’s airline system. The second part is the development phase, it began in 2008 and will end in 2013. In that part will be the new generation of technological system and components on the plans of the first phase. And the last phase, what will begin in 2014 called deployment phase, and will last for 2020. It this part of the programme will be the new infrasturcture in both Europe and in partner countries built.

But why is it good for us? Why is the SESAR such a big deal? Because air transport is more and more important in the countries’s economics, and the SESAR is not just a transport project, but a big, multinational system to will reform the Air Traffic Management as we know today. It will optimalise the air transportation what is thronged, but with the optimal organisation referring to the brochure of SESAR, we will have shorter flight times, with 50% fewer delays, more sustainable air travel through 10% in CO2 emissions, enchanced mobility through a better match between future demand and offer for air transport in line with economic growth, safer air travel, an overall increase in economic growth/ GDP, and the creation of new jobs. The number of those jobs will be 42000 if we can believe the official numbers. This new jobs can cause a growth in the GDP - but this will be not the only impact the project has on GDP - So if we count all the implementions, so direct, indirect and induced effects, in the period of 2013-2030 the SESAR would cause a 0,02 percentage point growth in the GDP.

It seems like air transportation has many effects on the economy of a country. We can find many studies about the regional economic benefits of air transport. They say that the most air transport employment is in the developed regions of the world, so the level of the air transportation in a country is related to a nation’s financial status. Buti n that case Hungary is not in the best position, but that is now an other topic.

So as we can see, if the SESAR turns into reality, with time it will have a very positive impact on the European air transportation and on the economy too. Europe in the time of the long.lasting crisis needs those new developments and investments to support innovation, mobility and economic growth.

But still we have to wait. The project needs too much circumstances, to give the wanted effect. First of all, one of the main points is central coordination. To build this new system in the EU, countries need good infrastructure, a synchronisation between each other, and for all these the project is in need of a lot of time. I hope, that for 2050 we will se the good impacts of that reform in the air on the ground too.

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British colonial heritage and modern railway development in Africa

British colonial heritage and modern railway development in Africa

by Gabor Gyurko,

'Few countries have ever industrialised […] in which entrepreneurs have been unable to corrupt the state, exploiting taxpayers and consumers far beyond the limits set by proper tolerance […]’

(Clive Dewey on imperial Britain’s ‘new industrial policy’)

Beyond military power and economic might, roads have shaped the outreach of empires throughout human history. Royal highways helped cement the rule of the Achaemenid dynasty over the Persian Empire. 

Roman roads aided legions of the Eternal City in their conquest of the known world. 

 

An epoch of trail network development steered the rise of Inca rule in Latin America.

It was Victorian Britain to pick up the mantle and recommence expanding the global transport infrastructure, with a more modern tool that time – railways. However, as regions and manufacturing production were part of a hierarchy, networks were constructed asymmetrically as well. Above all else, they were organized such that overseas resources would be supplied at the lowest cost for domestic British manufacturing. In Australia, they link the ‘wool-towns’ with the port of Sidney, the Northwestern coalmines with Newcastle harbor since the 1830s. They ship cotton across the British Raj of the Indian subcontinent from the mid-19^th century.

With this single purpose in mind, a plethora of private enterprises and joint ventures entered the railway construction industry to capture profits from transportation fees. In this respect, trunk lines were simply part of individual supply chains, not only not serving integration, but essentially blocking it through limiting differentiated local economic development. Spread out ownership also resulted in major technical discrepancies, which hindered network unifications once lines began overlapping. For instance, in both Australia and India three gauges were in use, none of which matched the then-evolving European standard. Furthermore, with the demise of the colonial world and production processes under realignment, newly independent states were left with assets abandoned by their owners, and the daunting task of reform.

Although a decline in the cost of trade is the most explicit consequence of transport expansion, a well-integrated network also serves as a tool of convergence, both in prices and in incomes. This makes it crucial for a country to have infrastructure in place that services domestic needs. Illustrative studies are abundant for the British Raj, with mixed results in case of prices and marginal to none for incomes. Scholars note that this failure was exacerbated in times of famine, when price inflations and trade from surplus regions helped spread hunger, instead of relieving it.

‘Colonial rule in Africa was intended to be cheap, viz. for taxpayers in Europe.’

(Gareth Austin on the motivation of colonial powers)

While political and social forces would organize over time across most major British domains, inducing more inclusive developments and improving the character of the national infrastructure greatly, such pressures were lacking in Africa at large. The geographical partition of the continent caused a deep political divide across neighboring countries. 

Power-hungry European sovereigns – especially Britain, France and Germany – utilized colonial transport networks as means of military defense against each other, and as instruments of dominance and exploitation over the African territories. Political will dictated the choice of railway over paved road construction as well, as freight was less costly and more secure via trunk lines. Furthermore, given the low density of population and economic activity of the continent and long distances between major centers, there was little room left for regional integration.

Past 50 years of independence there is little change in the transport structure of newly-formed states. Road density is still extremely low even in comparison with other developing countries. The railroad network is in similarly dire straits, with very limited new construction since the 1950s across the Sub-Saharan region. Expansions have been limited to the Southern countries, while other lines were either scrapped or abandoned over the years as they are either too dangerous or no longer viable technologically. Furthermore, as linkages between colonial conglomerates and their overseas affiliates began to realign, many lines have lost their relevance altogether.

The rule of thumb in infrastructural investments is that it creates spillovers and hence increases overall efficiency even if it is itself loss-making via the decline in transportation costs for both freight and passengers. However, calculations suggest that as markets are unsaturated, construction and maintenance of trunk lines is self-financing – yet, concessions still number in single digits. In a globalizing economy, national borders and interest become secondary to integration and the composite performance of regions. In the lack of price and income equalization, the produce of especially landlocked and ‘monocultural’ countries remains uncompetitive, while their populations suffer greatly from their inability to access global markets. Proposed developments  clearly seek to further the international unification process that is increasingly prevalent in contemporary African politics. 

Perhaps, infrastructural expansion can lead to the rise of an economically and politically more stable, and socially more equitable Africa for the 21^st century.

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Literature review:

Quote by Clive Dewey is from this article.

http://www.cscsarchive.org/dataarchive/textfiles/textfile.2008-09-14.3329631171/file

Quote by Gareth Austin is from this article.

http://poldev.revues.org/78#tocfrom1n5

An extensive review of Australian colonial railways is available via this website.

http://www.environment.gov.au/heritage/ahc/publications/commission/books/linking-a-nation/chapter-4.html

A brief summary of Indian railway development is available here, with specific analysis of famines in this article.

http://www.socsci.uci.edu/~dbogart/indraileconachieve.pdf

http://www.celdf.org/downloads/NATURE%20and%20EMPIRE%20-%20LAXMAN%20SATYA%20ARTICLE.pdf

A good summary of colonial heritage in African railroads is presented here, with policy recommendations found here, and in extensive detail here.

http://www.trforum.org/forum/downloads/2007_5A_AfricaTrans_paper.pdf

http://siteresources.worldbank.org/INTWDR2009/Resources/4231006-1225840759068/WDR09_18_GIM04web.pdf

http://www.infrastructureafrica.org/system/files/BP17%20Railways_maintxt_3.pdf

Illustrative brief on road networks in Africa is available here.

http://www.eu-africa-infrastructure-tf.net/attachments/library/aicd-background-paper-14-roads-sect-summary-en.pdf

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Introduction

Regionomist is a fairly new blog I started about the role of space in economics. The idea is to write about issues in Europe and around the world about the interaction of agglomeration and development, transportation and business. Like why cities exist and develop or why some regions are richer than others. Or what impact transportation may have on development. How companies decide about where to locate a new plant and how business conditions may affect it. Sure, its mostly economics but we are interested in geography, transport, urban development or even architecture. So far partners include ELTE University and Central European University.
Enjoy.

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„We Built It, They Didn’t Come” The Tale of Great Expectations

Empty airport of Cork in 2011

There is this old wisdom that compared to low transport costs the lower transportation cost is even better. This was a rationale for many transport projects in the past and a good slogan however it is not quite clear whether that is a sound argument to build railways, motorways and airports upon. Here is the brief case of Ireland: they have made it all. What they did not know at the time what they had coming: a big recession due to the turmoil it the USA and also a bursting bubble at home. The question arises: did they fail because they have made oversized projects and have invested huge amounts in vain or due to the economic slump of 2008. Could they have planned more carefully? Was this particular project bad by design? Answering all these will be a long shot but let’s give it a try and go in detail about Ireland’s latest transport project.

Ireland has come a long way from being one of the poorest countries in Europe to a fast growing one which earned him the nickname Celtic Tiger. From 1995 until 2002 they experienced substantially rapid growth. By 2004 they slowed down to an average growth rate 4,4-5% and that was the time when they began to implement the projects in question.

They designed a Spatial Policy with the announced objective to attract new and innovative industries in the country. This would have been a paradigm change for Ireland considering the fact that the majority of Irish industry was -and is still in the present - conventional mass production, employing low skilled workers. They reopened and connected railways, built motorways and introduced internal air services and the idea behind it was that Ireland could re-earn its “Celtic Tiger competitiveness” by transport improvements.

Based on the economic theory we expect from transportation improvements to have impact on the productive sector through product and labor market effect as well. The product market effect origins from the fact that by reduced transport costs firms source materials and deliver their product more efficient. Furthermore the labor market effect means that it is also cheaper to access labor supply.  So there is hypothetical potential to yield economic benefits by improving transport opportunities although we did not see it in this example. The new capacities like the airports and new railway lines run at loss. The expected new industries did not arrived so there are massive inefficiencies, the transportation network is oversized and the employment has shrunk. According to the transport minister Leo Varadkar the lesson they learnt is – not surprisingly, very core of economic theory – to optimize the size of investments, cut back spending and stop subsidizing inefficient transportation forms. They already introduced market forces by opening up railways to competition and they are also planning to franchise out local bus companies.

            What about the new firms? Why didn’t they come? The usual suspect is the global turmoil which is also the explanation suggested by the Irish government. As we know it began in the US by the shock which was due to a bubble in the housing market. This initial shock spilled over to the financial system which later on infected the real economy.  It makes sense that the firms did not come because they faced too high a risk to invest under such circumstances and they rather postponed new project because it would have been too costly to finance.

However I would make a case for not to overestimate the effect of the depression. The problem of the Irish transport project is rather that they misestimated the potential benefits and did not include incentives that also count for a firm when it choose its location like availability of skilled labor, special needs of the particular industry, local demand and taxes and subsidies. In the case of Ireland there were these foreseeable factors they left out and to make the consequences of this miscalculation even more serious the worst case scenario happened.

The truth is that we still do not know for sure whether transport improvement is only a catchy phrase or a sound policy instrument to expand output and employment. We have our pro cons mostly in the form of different cases, so there is no obvious choice of transport cost to set. Speaking of catchy phrases the most popular ones are nowadays clusters. In order to attract such high tech industries there are some basic conditions. There must be at very least a university and a research program which can be served as a core of concentration. What’s more the economic theory also implicates that there are demand conditions also needed. In this view what in Ireland was lacking is the policy’s objective to make room for innovation and actively support the existing clusters to attract there new companies.

Réka Sulyok

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The advantages of a high-speed rail – an example between Madrid and Barcelona

In 2008 a high-speed rail connection has been opened between Madrid and Barcelona shortening the time getting from one city to the other to 2 hours and 38 minutes. The main goals of the construction were the reduction in travel time on the corridor and the increase of capacity and safety conditions on the rail line (Frontier, 2011).

There are numerous changes that followed the launch of the HSR between Madrid and Barcelona. It shifts passengers from other transport modes, for example car, traditional rail and air (Dyjak et al., 2011). Constructing a new line between the two cities that are 600 km far from each other has a significant effect on air transport too (Rus, 2008). Previous to 2008 nearly 90 percent of the people travelling between Madrid and Barcelona went by air, but since the HSR has been built the number of passengers that go with train are increasing and even surpassing passengers going with planes. This trend is pointing towards a more environmentally friendly future as emissions per passenger on a high-speed train are approximately one-fourth of the emissions generated by flying by plane or driving a car. This is a great advantage as there is a growing public concern about environmental issues in Europe (Bachtler & Wren, 2005).

Lowering the emission of carbon dioxide is however not the main goal of most of the passengers who choose HSR to other means of transport. It is also more comfortable and convenient to travel with HSR. The train offers assigned reclining seats, computer outlets, movies, headsets, good food and gloved attendants to make people satisfied while travelling in these trains. Also, people can get to the station just 10 minutes before the departure unlike at airports, thus lowering the time spent on travelling. These are the main reasons why though it is not cheaper to travel by HSR than by plane between Madrid and Barcelona many choose this form of travelling (Rosenthal, 2010).

Also, polycentricism is a goal in Spain. As there is a low location index in Spain, with expanding the high-speed railway network the country tries to avoid concentration and centralization of the economic activity (Dyjak et al., 2011). The HSR line between Madrid and Barcelona has an impact on mobility, accessibility, socio-economic structure, urban image and spatial effects. These factors are considered to be significant but it is hard to quantify them in monetary terms (Frontier, 2011).

One of the most striking examples for the growing economic activity caused by HSR is the town of Ciudad Real located 120 miles from Madrid which has completely vanished because of the railway and the highway that bypassed the town. Now that an HSR station is located near the town and makes travel a lot less time-consuming, Ciudad Real has come alive as the HSR attracted a host of industries. Also, the University of Castilla-Lamancha has grown in size and importance too just because it is linked by the HSR (Catan, 2009).

Spain was always a top destination of tourists from all around the world. Now that more and more HSR lines are being built connecting cities all over the country it is easier not just for the workforce to be more flexible but also for the tourists to discover the cultural diversity of different Spanish regions (Raileurope, 2011). First, mostly business travelers were expected on the line between Barcelona and Madrid, but it is busy on the weekends too which means that Spanish people and tourists also use it to discover the cities. The government says that high-speed trains boost tourism which is the nation’s biggest industry and business travel. Also, constructing and maintaining a line make jobs for thousands of people. In the cities near the lines many companies that are involved in the different sectors of high-speed rail are investing in offices, plants and yards near the stations (Sheehan & Bee, 2012).

However, there are downsides too of the HSR line between Madrid and Barcelona. One of the problems is the corridor effect that shows the problem of the development of regions located between junctions of HSR lines. In these cases the infrastructure passes through the regions in between the stops without having much impact (Dyjak et al., 2011).

Moreover, the Spanish government wants to spend up to 77 billion dollars to expand and improve the lines while there is still an economic crisis.  When they built the Madrid-Barcelona line Spain it the economy was rising, but maybe now it would be wiser to cut the spending. Even if the number of passengers that choose HSR rises, the railroad system cannot cover its costs yet even between Madrid and Barcelona (Sheenan, 2012).

There are protests against the HSR too. A violent separatist group in the Basque country called Eta has launched an environmental campaign against the train. They even shot a local contractor in 2008 because he worked on the line (Tremlett, 2009). This shows that some people don’t want the country that is separated out somewhat to be intertwined (Catan, 2009), because they fear their independency and that they would assimilate to the rest of the country.

Nóra Szabó

References

Bachtler, J., & Wren, C. (2005). The evaluation of EU cohesion policy: Research questions andpolicy challenges.

Catan, T. (2009). Spain’s Bullet Train Changes Nation. The Wall Street Journal. 

Dyjak, R., Magda, I., Rosik, P., Zawistowski, J., Gapski, T., & Bienias, S. (2011). Evidence based Cohesion Policy and its role in achieving Europe 2020 objectives. In T. Gapski, S. Bienias, & E. Opalka (Eds.), . National Cohesion Strategy.

Raileurope. (2011). High Speed Rail News: Travel by High-Speed Train inSpain. High Speed Rail News.

Rosenthal, E. (2010). High-Speed Rail Gains Traction in Spain. The New York Times. Retrieved from 

Rus, G. D. (2008). The economic effects of High Speed Rail investment. OECD/ITF Joint Transport Research Centre Discussion.

Sheehan, T., & Bee, F. (2012). Economic impact of high-speed railvaries in Spain. San Francisco Chronicle.

Sheenan, T. (2012). Spain’s high-speed rail system offers lessons forCalifornia. The Orange County Register.

Tremlett, G. (2009). High-speed rail in Spain: From Madrid to Barcelonain a flash. Guardian.

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Success of the Vasco da Gama Bridge?

Background:

The constructions of the Vasco da Gama Bridge, in Lisboa, Portugal started in 1995 and after 3 years of work it was opened to the traffic in March, 1998. This is the longest bridge in Europe with its length of 17,2 km. The two goals of the bridge - clearly declared before this project - were accepted.

1. First, it aimed for the decongestion of the other bridge of Lisbon. The 25th of April Bridge was built in the sixties and the traffic has heavily increased since then, thus some measures needed to be taken.

2. Second, it meant to create the north-south connection around the capital city.

After the first bridge went into use, many inhabitants and firms moved to the other side of the river Tejo opting for a further location. However, it led to an increased congestion cost for those who traveled from Spain in order to trade or who decided to commute instead of living in the central business district. To sum it up, the goals of a new bridge were focused on lowering both transportation costs and congestion.

Theory: What is expected according to the theory?

As the Vasco da Gama Bridge is not the first connection between the north and the south side of the river Tejo (Tagus), the main goal was the reduction of congestion on the 25th of April Bridge. In our analysis we should ignore the impacts of the first bridge and focus on the second one. According to the theory, the bigger the city is (that means a larger number of firms), the higher the congestion costs are. If there are many companies in the city, congestion acts as a spreading force that stimulates firms to move from the central business district to the periphery zone, where traffic is lower.

The core model of new economic geography (congestion is not included) says that if transport costs are low then agglomeration is the stable equilibrium. Adding congestion to the theory, spreading equilibrium becomes more general and agglomeration is only an exception. According to the two-region core model (Brakman et al.), even a small change in congestion can easily lead to a new long-run equilibrium. As transport costs start to decrease, first partial then total agglomeration will develop. The further shrinking of costs result in spreading as a stable equilibrium again.

Although in Lisbon’s case it is not about cities. Decreasing congestion is the main aim of the bridge. So, based on this theory, the new equilibrium after the opening of the bridge depends on the previous balance in Lisbon. Assuming that building the 25^th of April resulted in spreading equilibrium, the Vasco da Gama Bridge should foster agglomeration and at the same time reduce congestion on the other bridge.

Reality: What had happened?

As for the decongestion of the 25th of April, traffic experts agreed that this aim can be reached without building a new bridge. Another, even better solution could have been achieved with focusing on the significant improvements of the railways and public transport connections between the two banks of the river. However, the Vasco da Gama Bridge was built.

According to a document from 1994 it had been estimated in advance that the new bridge would stimulate traffic above the annual transport growth rates without having too much impact on the other bridge. As we see on the table below, the expectations came true.

Source: Melo, J.

As data shows, after opening the Vasco da Gama Bridge the total amount of vehicles grew dramatically while the traffic of the 25^th of April Bridge did not represent significant decrease. Why? A new bridge always generates urban and traffic growth, as we can see in our case.

So, can we explain these empirical evidences with the transport coming from the East in order to trade with the Centrum of Portugal? As they do not have to either be in the traffic jam or bypass the whole river in order to get into the city, it should be the appropriate solution to reduce transport costs. Interestingly, according to a paper (Melo, J.), these traders prefer to use the bridge in Carregado that is about 30 km from Lisbon to the North and was built after the Vasco da Gama Bridge. This latest bridge seems to have become the main part of the north-south connection...

To sum it up, decreasing this level of congestion theoretically drives agglomeration forces. As the bridge did not stimulate so far development in the south, the theory seems to be confirmed on this side. However, we cannot observe any significant reduction in congestion on the 25^th of April Bridge either. So, the Vasco da Gama Bridge does not seem to reach its initial goals, although it has clearly positive effects in other areas.

Noémi Szabó 

References

Brakman et al. (2009). The New Introduction to Geographical Economics. Cambridge University Press, New York.

Melo, J. (2000). The Vasco da Gama Bridge on the Tagus Estuary: A paradigm of bad decision making, but good post-evaluation. World Transport Policy & Practice, 6(2). 20-30. p.

„Portugal celebrates opening of giant bridge” (1998).

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How can a boat lift help a region to develop?

But what is a boat lift? – one might ask the question. I assume that not all of the readers are exactly familiar with the concept of a boat lift, but in order to understand the following story everyone should get a basic idea of it.

In a nutshell a boatlift is a machine which transports boats between water at two different elevations. Every boatlift in the world moves vertically (like an elevator) but there is an extraordinary one which is in the focus of interest now. The Falkirk Wheel is the only boatlift in the world which moves rotational. The Wheel has two gondolas, containing 300-300 tonnes of water, into which boats enter. While the Wheel is rotating one of the gondolas is ascending and the other one is descending. During this process one boat is being lifted from downside to upside and the other one is being lowered  from upside to downside. (If you want to see how does it work you can check it here)

This amazing construction is near to Falkirk – a town located in the heart of Scotland halfway between Edinburg and Glasgow. The Falkirk Wheel connects the Union Canal, which starts in Edinburgh, and the Forth and Clyde Canal, which originates in Glasgow. The difference in height of the two canals at the wheel is 24 meters - a huge distance which has made it impossible to travel between Glasgow and Edinburgh by boat for decades.

Now that the reader is more familiar with the Falkirk Wheel I can return to the original question: how can a boat lift help a region to develop? Before the construction of the boatlift, Falkirk and the areas along the canals were  in the state of economic stagnation for decades. The canals were constructed in the 19^th century but the development of modern transport infrastructure such as railways and roads has lead to the reduced use of them. This meant that they were abandoned, full of rubbish and contamination;  buildings, houses, and shops near to the canals were deteriorating. People moved away from the neighborhood of the Union and Forth and Clyde Canals to Edinburgh or Glasgow.

This situation has changed when the Falkirk Wheel was constructed. Since 2002 the region has been showing the signs of economic prosperity and population growth. The existence of the boatlift have to kinds of benefits. The first are the direct benefits which have arose strictly from the reconstruction and operation of the Wheel and the canals. This include tourism (there are around 500,000 visitors in Falkirk every year since 2002) and boating activity. The second type of benefits are indirect ones referring to the exploitation of development opportunities and further investment. The connection of Edinburgh and Glasgow implied that transportation and travelling on boat required less time and money. New areas outside the cities became more easy to reach and starting a business along the canals became profitable. This boosted the creation of new business parks, industrial estates, central distribution centers and more than 2,000 canalside homes in the region.

What do basic data show us about these benefits? Empirics suggest that the direct connection of Edinburgh and Glasgow had advantageous effects on Falkirk and the regions alongside the Union and the Forth and Clide Canals. In the first four years after the construction of the boatlift Falkirk’s employment rate has risen by 10%, five times larger than the Scottish average. The activity rate has risen by 6% - high above the Scottish one. Total population has grown by 0,6%, which is quite noticeable considering the fact that the population in whole Scotland decreased during this period. This means that people migrate here because of the new jobs and opportunities. There were more than 4000 new jobs created the retail sector. Besides these, business sector increased by 13%  and Falkirk has become a retail center focused on services. This helped the region to change its’ economic profile by giving up old heavy industry and manufacturing sectors and turning to these new, more profitable and prospering sectors.

To summarize we can say that the short answer for the original question is the following. The rotating boatlift helped in regional development by connecting Falkirk and the canalside regions to Edinburgh and Glasgow, by attracting new labor force and tourism, and by creating the conditions for services and retail activities to expand from Glasgow and Edinburgh. Isn’t it exciting how this unique construction affected the economy of the whole region?

Petra  Lévay

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SR-520 Bridge Project: Reconnecting Seattle

by Brandon Musser

State Route 520 (SR 520) is a 12.8 mile corridor linking downtown Seattle and its Eastern suburbs of Bellevue, Kirkland, and Redmond (collectively known as the “Eastside”) which are separated by the 30 mile long Lake Washington. The route is of considerable economic importance to the greater Seattle area as it provides one of only two passages across the lake, connecting the dense downtown residential area to several large commercial centers, including Microsoft's main campus in Redmond which employs nearly 40,000 people (another employer in the area you may have heard of is Boeing). Every day, around 115,000 vehicles travel the four-lane, 2,285 meter long floating bridge which currently spans the lake. However, the bridge, which was opened in 1963, was originally designed to accommodate only 65,000 vehicles per day. During peak rush hours, traffic merging onto the bridge creates a bottleneck, turning the freeway into a parking-lot and the short 10-15 minute journey from Redmond to Seattle into an insufferable hour-long nightmare.

Construction is to begin in 2012 on a new bridge which will replace the existing bridge and expand the flow of traffic to six lanes, as well as a pedestrian path, and will be compatible with future inter-city light-rail proposals (http://www.wsdot.wa.gov/Partners/Build520/ ). Additional upgrades will be made to both on- and off-ramps, further improving the flow of traffic along the entire corridor, but especially in the vicinity of the bridge. The additional third lane (in each direction) will be a designated HOV lane (reserved for car-pools, motorcycles, and public transit), improving the reliability and attractiveness of using means of public transportation to commute to and from work. Much wider shoulders will also dramatically decrease the time of accident/breakdown response and cleanup/removal, which are often responsible for the worst traffic delays. The eventual implementation of light-rail will provide residents of the metropolitan centers of Bellevue and Seattle with a very quick, reliable point-to-point means of commuting which will avoid traffic all-together. The new bridge is scheduled to open in 2014, while a definite time-line has not yet been set for the light-rail.

The new bridge, along with the upgrades being made along the entire corridor in general should greatly reduce the cost of commuting between Seattle and the Eastside, not only in terms of dollars but in the opportunity cost of time as well. Using two different models of economic geography, we can speculate as to what kind of implications the drastically reduced transportation costs could have on the economic dynamics of the region. Predictions depend largely upon how one views the greater Seattle area; as two distinct regions (Seattle and the Eastside) or as one larger integrated economic region. According to the Krugman model of New Economic Geography, in a two region scenario exhibiting a mobile labor force, there are two forces in which reduced transport costs could induce agglomeration. The first being the price-index effect and the second being the home market effect (HME). Under the price-index effect, the larger market has an advantage because the price-index will fall with the size of the market, making products cheaper in that region. According to the HME, the region with higher aggregate income will enjoy a more than proportional amount of variety of consumer goods and a more than proportional amount of the higher-skilled workers, making the larger market more attractive. The NEG model would, therefore, suggest that lowering the transport costs between Seattle and the Eastside could spur agglomeration in the larger market (Seattle) at the expense of the smaller market.

On the other hand, if we consider the greater Seattle area to be one large market, the classic Von Thunen could offer insight as to the effects of reduced transport costs between Seattle and the Eastside. The model is used to examine crop selection based on bid-rent functions which depend heavily on the transport costs of various crops. In this case, we can think of different economic functions (industrial/commercial activities) with activity locations being based off of the same bid-rent functions.  According to the model, as transport costs fall, so should the area of land profitable for agricultural activity, introducing opportunities for new activities that were once unprofitable under high transport costs to become profitable. To me, this scenario depicts a region becoming increasingly integrated as the flow of goods (or people) becomes less costly.

I believe the second model is more applicable to this case of decreasing East-West transport costs in the Seattle area as I believe the area is much more resemblant of an integrated market than two separate regions. Reduced transport costs could allow smaller or less profitable firms to locate on the periphery, where it was once unprofitable to do so because of the high costs of attracting skilled-workers from the core (downtown). In other words, reducing the costs of labor flows throughout the greater metropolitan area will make the region more attractive to (external) firms looking to relocate to the area by being able to locate near the periphery (taking advantage of lower big-rent costs) while still being able to draw from a very large pool of skilled-workers in the core. Relocation of firms to the area will also attract new workers, enhancing the overall economic activity of the region.

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