How Beijing-Shanghai rail will effect economic growth?

How Beijing-Shanghai rail will effect economic growth? 

by Vanda Szendrei

Improving public transportation has always played an important role in economic development. Now you can see the possible effects of the new Chinese high speed railway, even for clustering.

In the summer of 2011 the Beijing-Shanghai High-Speed Railway started to operate connecting together two major economic zones. The railway is 1.318-kilometre long and it is the world’s longest high-speed line ever constructed in a single phase. This line means only one part of the huge railway development in China: starting with the operation of China’s first high-speed railway, Beijing-Tianjin intercity railway on August 1, 2008, China’s high speed railway develops from nothing. In the past four years, 21 high-speed railways have been come into service. Until the end of July 2012, the total mileage of China’s high-speed railway reaches up to 6,894km, ranking first in the world. Let’s have a look why the railway is vital for China! 

This development is determined by both China’s first and second geographic nature. Regarding its first geographic nature, China is a vast country with 5,000 km of north-south and east-vast distance. As for second geographic nature the distribution of resources and industries is uneven and large amount of goods through the regions needs to be transported via train. These reasons explain the importance of these giant constructions.

One of the first effects was the decline in transportation costs. Coinciding with the rail launch, economy airfares have slumped with 52 % immediately. However, fares in less price sensitive business and first-class markets appear to have remained comparatively unaffected. Since commuting has become faster for most people, the real distance (measured in time, not in distance) has decreased.

Going back to the impacts, accelerating economic growth seems to be obvious. According to the China Daily newspaper, the newest high-speed railway will create a new economic belt and strengthen the integration of the Bohai Sea Rim and the Yangtze River Delta economic zones. Indeed before the operation started, cities surrounding the railway had benefited from its potential economic effect because real estate prices have risen in spite of the general downward trend. For example in Changzhou, a third-tier city the real estate prices doubled within one year. Soaring housing prices along the rail line are due to the high-speed train's projected effect of business clustering – predicts the paper.

The “direction of” the clustering is an important question. Probably the concerned inter-cities will behave as Central Business Districts gaining more importance over the neighbouring area. Although, as we have seen in the case of the fast-railway between Madrid and the southern part of Spain, a possible outcome is that either Shanghai or Beijing or both of them will loose from their leading role and there will be a shift in emphases to the five inter-stations.

This hypothesis is supported by Zhao Hui who analysed the prospects of this measure with investigating the case of Jinan West Area. The expert predicts that after the completion of Beijing-Shanghai High-Speed Railway, the passenger capacity can achieve 27,000,000 people in the very short time which will lead to huge demand to service industry therefore the market potential of these areas will increase as well. It is possible that local cultural industry will develop enormously. According to the plan, Jinan’s Cartoon Industry will achieve 20 billion dollar. Moreover Huaiyin Industry district, Huaiyin Industry Science district and Modernization International Physical distribution which are close to the station will gain a chance to develop.

However, it seems a self-generating process the government has a vital role too. So, what should the government do? At first, they should provide an appropriate environment for investment through following the market economy rule, producing effective administration environment and promoting strict and standard legal and faithful credit environment. Secondly, they should display the function of strategy guidance It realizes by the pure pursue quantity to quality, introduces better project of high technology, intensity investment, low resources consume, less environmental pollution, strong lead role, good development prospects. Finally, they should formulate corresponding industrial promotion policy continuity. That means, relevant institution should pay close attention to research corresponding executive regulation to enlarge the support to the development of Cartoon Industry. Evolving good tax environment can be a key to this goal.

What we can deduct from case study is that although high-speed rail means a great opportunity for clustering, Chinese policy-makers need to be cautious in order to promote and not hinder the development.

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The Californian high-speed rail project

The Californian high-speed rail project 

A prestige investment

by Szilard Peredi

The construction of the high-speed rail in California started with big expectations, but now it seems that the efficiency of the project is strongly questionable.

The High-speed rails are probably the most amazing transport systems of the world. These rails are the symbols of the future’s technologies in some way. Maybe that’s the reason, why it becomes to a prestige investment instead of an efficient movement of the governments.

Of course, it’s very hard to compute the costs and the benefits before the construction. The engineers have to take into account the demography and macroeconomic changes, the intertemporal trade-offs, and a lot of stochastic variables. But after the construction, they also need to find all of the externalities, to be able to rate the project. So you can never have an ultimate opinion about the success of a HSR development.

However, if a project lost the support of the majority before the first segment of the implementing, probably something went wrong. This happened in the case of the Californian high-speed rail project. The project biggest purpose is to connect Los Angeles and San Francisco with high-speed rail service by about 2028. 

The project wasn’t the only in the USA, but all of the other HSR programs was canceled because of the local politics. It can be said generally, the US government with Barack Obama supported the projects, while the local politicians were against them because of the nuisances. And in this fight the only survival was California with its strong democratic background.

It’s hard to believe that with this history this could be an efficient program, and the happenings justify our opinion. The California High-Speed Rail Authority, which is managing the project, announced a delay, which reduced the supporter basis of the construction. And this basis wasn’t so strong before the notification either.

In The USA the property rights are strong, and this is hardly compatible with big infrastructural developments. The planned track traverses a lot of farmer’s land, and they doesn’t see any of the advantages of the project. But this also could be said about churches, schools, businesses and homeowners near the track.

If we suppose that the government is the arm of the citizens, the project wouldn’t be finished at all. In 2008 people voted $9 billion bond issue to funding the early stages of the project. And this is just a small part of the whole needed finance support. The whole cost of the bullet train project is $68 billion.

After 4 years, in 2012, a USC Dornsife/Los Angeles Times poll found changes in people’s opinion. The 55% of the answerers want back the $9 billion bond issue, which was voting with majority in 2008, and 59% said that, if they could vote again in this case, they would vote against it.

The plans also changed a lot during the 4 years. According the new calculations, the cost of the project will be the double of the original amount. Moreover, now the constructors plan the sharing of the track with slower commuter and freight trains in some areas.

According to the coalition of bullet train backers this investment is needed in long term, because the other forms of transport, like cars and airplanes, will reach their limit.

But we can say that these problems come with democracy, and don’t affect the long term efficiency. But the poll saddest part is the results, which said that the most of the people don’t think that, they will use the HSR in more than once in a week.

Of course, none of the arguments above guarantee the failure of the Californian high-speed rail project. The bias of the poll could be big, and the opinions maybe temporary. But I think that this project shows a good example, that a mainly political prestige investment how becomes a not supporting money wasting.

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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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„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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Consumer dissatisfaction with Hungarian railways

It was 6 AM when I got on the train in a town called Cegléd, about 70 km from Budapest, the capital of Hungary. It was a cold morning in mid-January, so I was glad that the train arrived only 5 minutes late. The wagon was dimly lit, and without the sun it was hard to find my way to an empty seat, even though there were plenty of them. I did not bother with the cold on the train and quickly fell asleep.

When I woke up, the train stopped in a station and people were swarming into the wagon. It was overwhelmed in a second, full with the noise and odor of the early morning commuters, heading Budapest. Most of them were young adults and pupils. The vapor and thickness of the carriage was hard to bear. The wagon was way too small for all us, but it seemed that it was just the everyday routine, as I haven’t heard any complaints about the situation.

The delay, the cold, the lack of proper lights, the odor, the noise and all the other inconveniences were just regular for the notorious Hungarian railway company, the MÁV, which affects the everyday life of at least 700 thousand commuters around Budapest.

According to a study by Eboli & Mazzula (2010), there are ten crucial characteristics of a rail service that determines passenger satisfaction:

•             Timetable: frequency and travel time

•             Reliability: trains on time

•             Completeness: number of stops, station accessibility, etc.

•             Information: time table and price information

•             Comfort: journey experience, odor, noise

•             Cleanliness: both train and station

•             Safety: against accidents

•             Safety: of private property

•             Price

•             Other: environmental protection, etc.

I decided to create my own consumer satisfaction survey on the commuters’ preferences living in the outskirts of Budapest. The question that I wanted to answer was the following: „How could the MÁV enhance its consumers’ satisfaction effectively?”

In March 2012, I have created a survey and sent it to the most famous MÁV blog (mav.blog.hu) , and posted it on the Facebook wall of the largest commuters’ towns near Budapest. Answerers had to show their preferences on a five-point scale. It worked reasonably well, as I have been able to reach 300 answerers, and half of them were real everyday commuters. The results are quite interesting.

There seems to be only a small difference between the views’ of commuters and rare-users. Commuters use train services everyday, and their most important needs are to get into town quickly, reliably and cheaply. Most of them are living on the outskirts of Budapest, getting up everyday early to arrive to work before 8 or 9 am, and travel home in the afternoon. They chose to buy a cheaper and greener house, but in turn they have to commute everyday, that consumes time and money.

In my sample, most of the rare-users travel only occasionaly, but several times a year. We may imagine them living in Budapest, but they regularly take the train to visit relatives or to go on holidays.

So, How could the MÁV enhance its consumers’ satisfaction effectively? – Results

Travel time, punctuality and cleanliness. By far these are the three most important factors that affect the whole sample. It is interesting that for the commuters, top3 are travel time, punctuality and the price of the journey. We can see that cleanliness of the train is not as important for them as the price of the service. An other, not surprising difference is that the frequency of the service is only important for the commuters. The most unimportant factor was environmental protection.

It is not enough to see how satisfied people are with a certain aspect of the service. The most important factor is how they feel about the importance of this aspect. I have also asked on a five-point scale how important they find these aspects, and I created the „relative dissatisfaction” of the most important factors. It shows how dissatisfied the answerers are, according to the factor’s importance (the larger the number, the more dissatisfied).

I have also performed some more advanced methods to enhance precision. These results show that if the MÁV would be able to increase the average answerer’s travel time satisfaction with 10%, the average overall consumer satisfaction could increase with 3,7%. Punctuality could have 3,5%, price of the journey 2,5% and cleanliness 2%. We can see that all of these improvements have small effects on the overall satisfaction of consumers.

A possible improvement could be the broader use of new suburban trains, like the FLIRT electric regional train (on the photo). On those lines where these new models are running, the average passenger is significantly more satisfied, both with the overall performance of MÁV and the comfort of the journey.

How could the MÁV enhance its consumers’ satisfaction effectively? – what could the MÁV do?

Travel time and punctuality are strongly related to the quality of the rail network. Experts on this topic also stressed out that the most important improvement would be the modernisation of the network, taking into consideration the 21th century needs of a commuter. That takes a lot of time, money and effort; therefore, at best this process would yield results after long years.

But comfort and cleanliness are easier and cheaper to achieve with a new, more effective cleaning company. The frequency of the trains could be enhanced by new, well-organised time tables. For that, the attitude of this state-owned company has to be changed.

Csaba Gábor Pogonyi

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Shrinking the Atlantic Ocean – A Case of Transatlantic Superspeed VacTrain

by Shota Gvaramadze

The idea of it was first proposed by Michel Verne in his book in 1888, a son of the famous French science fiction author Jules Verne. But it was not until 60ies when engineering visionaries started to get into the science of building a transatlantic superspeed vac-train (TSV). The idea is spectacular and audacious, as well as unimaginably hard and expensive by today’s capacities and costs.  

A TSV train would hover above the track without physically touching it thanks to the magnets, eliminating the rail friction altogether (which limits the train speed). Magnetic levitation train is no longer a science fiction; such train already has been serving a route between Shanghai city and its airport since 2004. Different from a conventional maglev train, TSV would be moving in a vacuum tunnel submerged and fixed 50 meters above the bottom of Atlantic Ocean (shown on the picture), eliminating another source of friction - air. By eliminating two sources of friction, air and rail track, the train will be able to accelerate up to the speed of 8000 km/h allowing the train to cover a distance of 5000 kilometers between London and New York in just 54 minutes, shrinking the time and space between two continents (it would take 20 minutes to reach the full speed and same time to slow down to make the journey comfortable for passengers. This is the reason why it would take about 54 minutes to travel and not less).

Different sources estimate the cost of project from $175 billion up to staggering $12 trillion making the project unimaginable to be embraced by any current government. For a comparison, average cost of building a 500 km HSR track in Europe is estimated to be around 10 billion EUR (operational costs not included). This number doesn’t even reach the lowest proposed cost of $175 billion. However, as the engineering and material sciences evolve and advance, costs will be pushed down to a point where undertaking such venture might even become possible. In spite of all costs, uncertainties, technical feasibility, risks associated with under water travel (which is way outside of the scope of this article), I think it would still be interesting to look into the socio-economic impacts of such a grandiose undertaking should it one day become a reality.

The Japanese and European experiences show that HSR trains that cover the distances between two cities in less than 2.5 hours can obtain 80-90% of all air traffic and 50% if HSR train covers the distance in less than 4.5 hours. TSV easily meets this requirement. Financial Times in 2009 listed London – New York flight as the third busiest international route with annual number of passengers slightly over 1,6 million. By transporting 80-90% of those passengers, TSV will be one of the busiest train routes on earth.

High Speed Rail (HSR) projects almost never cover their infrastructure and operational costs and are therefore financed by tax payers’ money. Such spending is always justified by the wider social and economic benefits HSRs bring. These are passenger time savings, reduction in congestion, reduction in accidents, reduction in environmental externalities and benefits including the development of the less developed regions. Historically, United States and UKhave favored HSR projects much less than other European countries, Japan or China. However, if such project was ever given a green light by British and American governments, TSV would make impossible possible and have a number of wide scale social and economic effects on two cities.

A study on UK’s InterCity 125/225, a HSR network, has shown that towns that became reachable from London within 1 and 2 hours, had higher employment rates as well as gross value added per head after the construction of HSR line. Employment increase was highest in knowledge intensive business services and creative industries. Reason for this is the high cost of tacit knowledge exchange in spite of advancement of information and communication technologies. Therefore, New Yorkand London, two hubs of advanced and high value added service industries have very high potential to benefit from a TSV. Cutting a travel time between two cities from 7 hours (by air) to 54 minutes would enable more frequent business meetings, increase working hours of business travelers and as a result increase the productivity of firms. Extent of productivity will also depend on ticket costs, whether every day commuting would be possible, uniting two job markets into one, increasing the size of the labor market pool and enabling workers to move from less productive to more productive jobs between two cities. These two cities as agglomerated as they already are would become even more competitive, with firms having larger markets and enjoying the scale economies. As world’s two financial centers, these cities probably have most in common than any other two cities in different countries. By having similar physical size and economies, as well as identical intellectual resources and endowments, these two cities could benefit from a shared and united market most. On the negative side, as the output of these two cities would increase, so would the congestion and office rents, which already pose enormous problems to  respective city officials.

As history has already shown, often impossible can quickly become possible. So who knows maybe one day it will really be possible to have lunch on Manhattan and still make it to London for an evening theatre performance. 

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