Can high-speed rail have a transformative effect on the economy?

High-speed rail is frequently claimed to have a transformative effect on the economy. By

bringing cities and regions closer together it is argued that economies can benefit from

lower generalised costs of transport leading to enhanced growth and productivity. A

counter argument is that such effects are largely redistributive with some regions benefiting

and others suffering depending on their ability to take advantage of new opportunities.

However, some argue further than this and claim that such step changes in transport

provision can lead to major changes in economic structure that can transform regions’

absolute as well as relative position and thus redress the existence of regional disparities.

In this paper, we address the question as to whether there is a clear and robust economic

theory of the transformational impact of high-speed rail and if there is any consistent

evidence to support it? The paper uses evidence from the North-west European High-Speed

Rail network and a more detailed study of the UK’s first high-speed line, HS1. This is

followed by a discussion of the various claims and counter-claims for the impact of the

proposed HS2 that will link London with Birmingham, Leeds and Manchester. On the basis of

this some of the implications for the appraisal of such projects are considered. The main

conclusion from the paper is that transport infrastructure by itself is not likely to be

transformative, but coupled with other policy interventions it can contribute to such an

effect.